It seems that when KAR Auctions bought Openlane it inherited a $90 million treble damages lawsuit that comes along with it. MVTRAC filed suit against Digital Recognition Network/ DRN and Recovery Database Network/RDN, owned by Openlane in 2010 and that suit has not yet been settled. While it is obvious monetarily why KAR Auctions bought an online auction such as Openlane, it is not so obvious what they will do with the baggage that came with it. That is the $210 million dollar question. 

KAR Auctions also owns the national repossession forwarder, PAR, who currently does not choose to use Openlane's RDN software. They prefer another software platform so what are the plans for RDN? Will they sell it off? Will they utilize it within their organization of PAR and their more recently acquired national repossession forwarder, Liberty Lenders Service?  KAR has allowed PAR to somewhat absorb Liberty Lenders Services. The new name is Liberty Recovery and while they are capable of handling national repossessions, it seems that PAR has quietly downsized them to the five state repossession company that they once were while PAR continues to cover the entire nation. The Liberty Recovery employees are required to use the PAR repossession software of choice which is not currently RDN. Will KAR Auctions simply sell off this portion of their purchase?

 A question that all other national repossession companies who currently use the RDN software must be asking themselves is how to get out of their current contract with RDN. After all, who wants to submit their daily repossession activities into a database owned by the parent company of two competitive national repossession forwarders? It is feasible to believe that PAR may have access to all License Plate Recognition data, Recovery data, client data, agent data, and on and on.

Renovo Services, a national repossession forwarding company, and  Manheim Auctons previously announced a strategic partnership to begin selling repossessed vehicles directly from secured storage facilities across the country. We are told that Renovo currently uses DRN license plate recognition system via RDN. How will this affect them? Manheims biggest competition, Adesa, whose parent company owns two forwarding companis now owns the  very RDN platform that Renovo uses to operate their LPR cameras and repossession assignments.

I envision an ethical disaster for the repossession industry that will need to be addressed swiftly to avoid chaos. With the recent decline in KAR Auction stock, I would think the first thing that the shareholders will want to see happen is this lawsuit being settled.  Next, dont land yourself i another one due to ethics over a software platform.

Tim W.

GRB, LLC

It looks like there is already concern in the recovery industry. The following email just went out to the repossession industry currenty utilizing RDN.

 Tim

To all RDN customers:

Yesterday, it was announced that OPENLANE, Inc., the parent company of Recovery Database Network, has signed a definitive agreement to be acquired by KAR Auction Services, Inc., subject to certain closing conditions.  Many of RDN's and OPENLANE's recovery service provider customers have asked questions about whether this acquisition will somehow affect RDN's independence because PAR North America, a forwarding company and competitor to many RDN/OPENLANE recovery service provider customers, is also owned by KAR.  KAR and OPENLANE are subject to regulatory laws and cannot finalize its integration until the transaction has closed, and more details will be forthcoming once that has happened. However, in the meantime I can assure you that KAR and OPENLANE are  committed to operating RDN in a fashion that protects its customers' information, including, but not limited to, the fee schedules, client lists and volume information.  We intend for PAR and RDN/OPENLANE to have an arms length relationship and independent systems and management to ensure that RDN remains true to its strategic mission of being an independent, open, many-to-many software platform through which recovery service providers can interact directly with lenders and manage their entire workflow management system with the knowledge and confidence that their data will remain confidential.   

 

Regarding remarketing, OPENLANE plans to continue to support recovery service providers and their lenders in selling vehicles directly from the recovery location, as we have for years.   There are no current plans for changes in the OPENLANE team supporting the remarketing program, nor in the approach.   OPENLANE remains committed to focusing on providing the most robust online auction platform and customer service in the industry.

 

Sincerely,

 Peter Kelly, Chief Executive Officer, OPENLANE, Inc