Ford Motor Credit Company on Friday filed a request in court to remove bankruptcy protections from what’s left of the Reagor Dykes dealerships.
As of the time of this news item, a judge has not yet ruled.
Ford filed a document in bankruptcy court that said a reorganization plan was promised but has not been provided. Ford also said any reorganization plan is “unconfirmable” even before it is ever filed.
Reagor Dykes companies filed for bankruptcy on August 1 with more RD companies filing in November. RD has used Ford’s money and vehicles to stay in business under Chapter 11 bankruptcy.
Ford lays out the case that without Ford’s money and inventory, RD cannot continue operations. On top of that, Ford also claims a lot of other RD property as collateral.
For a time, it looked like the dealerships would be sold at auction in November to the KamKad Automotive Group or to any other company that wanted to outbid KamKad. However, the deal fell through.
At about the same time, the McDougal-Dykes-Ewing Group came forward with a proposal. It involved former Lubbock Mayor Marc McDougal, Dallas area businessman Fin Ewing, and current RD partner Rick Dykes.
Ford raised objections to the rough draft of the proposal in part because it would settle any liability of Mr. Dykes and Bart Reagor.
Ford said, “To the extent a proposed plan contains legally impermissible provisions consistent with the [proposal], such as third-party releases of Bart Reagor and Rick Dykes, it is facially unconfirmable.”
Ford said Reagor Dykes will likely file a plan, but it won’t be good enough under federal bankruptcy law.
Ford has asked the bankruptcy court to remove protections for RD as of January 5, “so that [Ford] may proceed with its state law remedies to take possession and dispose of its collateral.”
“Now, Ford Credit asks this Court to lift the stay because there is no reorganization that is in prospect and Ford Credit can no longer allow its collateral to be used and its losses to increase in pursuit of an unconfirmable Plan.”
Right before RD filed for bankruptcy, Ford accused RD of outright fraud. Ford accused RD of defaulting on roughly $40 million of debt, and Ford repeated the allegations of fraud on Friday. The total debt to Ford is roughly $112 million.
In part Ford said:
“Bart Reagor and Rick Dykes are the sole shareholders of Debtors. The nature and extent of Mr. Reagor’s and Mr. Dykes’ involvement in the fraudulent activities of Debtors is being investigated. However, the prospect of a Plan provision forcing releases of any and all potential claims against Mr. Reagor and Mr. Dykes is not only contrary to the law, but simply unfair.”
Local banks have accused the Reagor Dykes companies of a form of bank fraud called check kiting. Court records also accused former RD Chief Financial Officer Shane Smith of making false financial statements.
In the court filing on Friday, Ford also said in part:
“Ford Credit maintains that, the value of Debtors’ remaining vehicle inventory is approximately $62 million. Ford Credit estimates that the value of Debtors’ non-vehicle assets is approximately $2.5 million. Debtors’ Bankruptcy Schedules list personal property assets that total approximately $98 million (which includes outstanding notes owed to Debtors by Bart Reagor and Rick Dykes in the approximate amount of $7 million, amounts held in various bank accounts, and goodwill value associated with the franchises).”
- CLICK HERE to read the latest Ford document
- CLICK HERE to read the McDougal-Dykes-Ewing Group memo that Ford introduced in bankruptcy court as evidence.
Related Stories: Reagor Dykes – extended coverage of the bankruptcy
