David Langston and the law firm of Mullin Hoard and Brown requested permission Friday afternoon to withdraw as the bankruptcy attorney for a list of Reagor Dykes (RD) companies.
Some but not all RD companies filed for chapter 11 bankruptcy on August 1. RD was accused of defaulting on $40 million of debt by Ford Motor Credit Company. Eventually Ford would go on to accuse RD of fraud.
Langston claimed in court records that MHB was paid a $500,000 retainer. Half of the retainer came from Rick Dykes and the other half from Bart Reagor.
RD requested permission to hire a Chief Restructuring Officer to replace RD’s Chief Financial Officer. The firm of BlackBriar Advisors LLC was authorized to become CRO and on August 21, the CRO said it no longer wanted Langston and MHB.
The CRO wanted to bring in its own legal team, Foley & Lardner.
Langston and MHB talked to office of U.S. Trustee on how to best change attorneys. The answer, according to court records, was to file a motion to approve legal services, and application for compensation.
Langston and MHB also requested the bankruptcy judge rule on whether the retainer is personal property of Mr. Reagor and Mr. Dykes or if it is property of the bankruptcy estate.
The fees will range from $80 per hour to $450 per hour.
RD has permission to pay employees and other pressing expenses until August 30 when another court hearing has been scheduled.
Langston and MHB have been invited to make comment, and an update will be provided if the invitation is accepted.
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