An undetermined number of Chrysler Group LLC dealers are at risk of closure within a month, caught in a dispute between their former finance company and their new lender.

Imperiled dealers are those with mortgages and capital loans with former captive finance company Chrysler Financial but who need a line of credit from new lender GMAC Financial Services to buy vehicle stock with a wholesale or "floor plan" loan. They have temporary financing but face a mid-November deadline to secure permanent financing to stay in business.

Central to the spat is who has first dibs on assets if a dealer goes under and two finance companies hold debt. Caught in this dilemma are Chrysler dealers who don't have enough equity in their business to pay off the old loans to Chrysler Financial to alleviate any obstacles to securing new loans from GMAC or another, independent source. Without new GMAC money to buy vehicles a dealer has little choice but to liquidate.

About half the 1,500 Chrysler dealers seeking GMAC financing have been approved, but the possible loss of dozens of dealers or more would be a blow to an automaker that cannot afford to lose further sales outlets as it scrambles to restructure and pay back about $15 billion in government loans that helped it exit bankruptcy and form a new company in partnership with Fiat SpA. Chrysler is to unveil a five-year business and product plan Nov. 4 under new Chief Executive Sergio Marchionne.

Chrysler shed 789 dealers in bankruptcy, keeping almost 2,400 franchises deemed key to the automaker's future based on their performance and location. Any dealers forced to close now because they cannot secure financing will come from the handpicked group that remains.

"Everybody's nervous," said Jim Arrigo, a Florida dealer and co-chairman of the Chrysler Dealer Council. "There is a large group of dealers waiting to see if they can get refinanced."

Most at risk are smaller dealers and those whose equity has fallen below the value of the real estate and capital loans they have with Chrysler Financial. For example, a dealer could have a $10 million mortgage on a dealership that today is valued at $7 million.

The average floor plan loan for a dealer is $4.9 million, according to the National Automobile Dealers Association.

"It's a huge cloud looming over Chrysler's attempts to restructure," said a dealer who asked not to be identified because he's trying to resolve his own financing issues.

The automaker is working with both finance companies and "all parties want it to work," said Chrysler spokeswoman Kathy Graham. "We're not seeing anything to cause us alarm or that we didn't expect."

But dealers said they are getting very different updates from the Chrysler, Chrysler Financial and GMAC officials, who have told them hundreds of dealers could be left without financing. GMAC refutes that number as exaggerated.

The impact on Chrysler is being described as potentially devastating, said the unidentified dealer who was updated on the transition efforts this week by officials with Chrysler and GMAC.

Affected dealers started receiving letters from GMAC this week warning they need to settle their finance issues by early November, said the dealer. GMAC spokeswoman Sue Mallino confirmed letters were sent.

Graham said Chrysler is optimistic matters will be resolved by the deadline and that the number of dealers that could fail is not out of line with projections that as many as 10 percent of dealers are in danger of going out of business anyway in today's smaller automotive market.

The situation is messy and dates to April 30 when the U.S. Treasury mandated that Chrysler file for bankruptcy protection.

As part of the automaker's restructuring, the government announced the new Chrysler would enter into an agreement with GMAC to provide dealer and customer financing in the future -- business that had long been the domain of Chrysler Financial.

GMAC was seen as a more viable institution and was granted bank holding company status earlier this year, allowing an expansion of its retail banking business and subjecting the bank to government regulations that don't apply to captive lenders owned by carmakers. Chrysler Financial applied for similar status in 2005 but withdrew its application earlier this year, said spokeswoman Amber Gowen.

Cerberus Capital Management LP divested itself of Chrysler when the automaker filed for bankruptcy but still owns Chrysler Financial. Many dealers think Cerberus is trying to collect its loans to wind down the finance company with a portfolio of $26 billion, down from $60 billion at the start of the year. The company's global work force has shrunk from 4,000 in January to less than 2,700 employees.

"Chrysler Financial is going out of business and being difficult," said Mike Hancheruk, chief financial officer of DARCARS Automotive Group in Silver Spring, Md. The dealers interviewed think Chrysler Financial would like to settle all loans and be free of Chrysler business by year end.

Chrysler Financial remains active, "has no plans to file for bankruptcy," and has enough capital to meet its obligations, Gowen said.

Cerberus spokesman Peter Duda declined to comment.

Meanwhile, the Treasury said in April it would ensure GMAC had the capital needed to take on the new Chrysler business, provided $4 billion to help cover additional loans and said Chrysler Financial would cooperate in the transition of its business to GMAC.

GMAC began offering retail loans to buyers of Chrysler, Dodge and Jeep vehicles immediately.

So that dealers could start ordering cars again, GMAC also provided temporary floor plan financing -- good until next month, by which time GMAC expected to have conducted the due diligence of each individual dealer to approve permanent financing. Without financing in place, the automaker won't ship new vehicles to a dealer. The timing is crucial as dealers are starting to receive their new 2010 models.

GMAC reallocated extra manpower to evaluating the new dealers, and most of the 1,500 requests for permanent financing should be approved by Nov. 15, Mallino said. As of this week, more than half have been notified that their financing has been approved, she said.

A small but unspecified number lack the collateral to meet GMAC's lending criteria and will not qualify for loans, Mallino said.

Dealers who still have loans with Chrysler Financial say they have been told by GMAC that permanent floor plans will not be approved without a transfer of paperwork from Chrysler Financial that guarantees first rights to collect on assets -- no exceptions.

Chrysler Financial says it has a fiduciary responsibility to its shareholders and won't give up first-lien rights until all loans are paid.

Arrigo said he is not aware of dealers going out of business yet, but said that will likely come to a head in the next few weeks.