789 franchises are slated to go out of business tonight. Chrysler arranges for leftover inventory to be sold to surviving dealerships at a loss. And GM dealers wrestle with contract issues.

Less than a month ago, the troubled automaker sent notice to about a quarter of its dealerships that it would reject their franchise agreements in Bankruptcy Court, forcing them to close.

That has led to a mad scramble among dealers to unload their inventory, as well as accusations of unfair or arbitrary treatment by the company. Yet despite protests from dealers and some members of Congress, Chrysler has refused to budge, insisting that the dealerships must go as part of the company’s efforts to restructure.

Today the judge overseeing the bankruptcy proceedings, Arthur Gonzalez, is expected to rule on a last-ditch effort by the dealers to prevent the contract cancellations. That means those 789 dealers could be out of business as of tonight.

“They don’t care what happens, they’re going to cut us all off,” said Richard Carpenter, vice president of Oroville Motors, a Dodge, Chrysler and Jeep dealership in Oroville, Calif. He’s unloaded 80% of his inventory in the last four weeks but still has a few vehicles left.

Chrysler contends that it must reduce its dealer ranks to return to viability, pointing out that competitors such as Toyota have far fewer dealers yet sell more cars. Reducing its number of dealers, the automaker says, will allow the remaining locations to operate more profitably and provide better customer service.

Gonzalez called Chrysler’s position a “very strong argument” in court last week.

Dealer advocates feel otherwise.

“No dealer agreement should be rejected,” said Mike Charapp, an attorney representing the National Automobile Dealers Assn.

The group contends that dealers — who operate as independent businesspeople — don’t cost Chrysler any money to operate, and that cutting them could reduce the automakers’ revenue. Further, they argue, the move violates state franchise laws protecting dealers and could set a dangerous precedent going forward.

“Why is this necessary?” said Bailey Wood, a spokesman for the national dealers group.

The group testified before a Senate panel on the matter last week and will return to the Capitol Hill on Thursday, Wood said, adding that the group expects the matter to come up in other testimony before both the House and Senate this week.

Meanwhile, dealers slated for termination have been trying to unload inventory before today’s deadline, sometimes at fire-sale prices. They feared being stuck with cars they would no longer be able to sell once they lost their franchises.