Vista Bank on Monday filed a response to allegations made by the Chief Restructuring Officer of Reagor Dykes.
Several Reagor Dykes companies filed for bankruptcy on August 1. They were later placed under the control of the CRO.
Reagor Dykes bounced millions of dollars of checks on local banks at the time of the bankruptcy. Vista was among those banks.
In the days after August 1, deposits continued to come in on the Reagor Dykes overdrafted bank accounts. In late October, Vista asked the bankruptcy judge for permission to keep those deposits to reduce the amount of overdraft.
Shortly after that, on November 1, the CRO filed a court document accusing Vista Bank of depositing money into the Reagor Dykes accounts in violation of bankruptcy law.
The CRO argued that Vista should have redirected those deposits to a new debtor-in-possession account. The CRO argued that Vista should have simply accepted the loss on those overdrafts, and then filed a bankruptcy claim.
Vista raised several defenses on Monday, among them was the idea that the funds deposited in the Reagor Dykes accounts were already earmarked for Vista Bank even before Vista was officially notified of the bankruptcy.
Previous court records indicated that the Reagor Dykes overdrafts were more than $13 million just on Vista alone. If Vista is allowed to keep the deposits that came in later, it would reduce the overdrafts by roughly $1 million.
A bankruptcy judge has not ruled on the issue.
Related Stories: Reagor Dykes – extended coverage of the bankruptcy
