With no reorganization plan yet filed, Ford Credit seeks to take possession of Reagor-Dykes vehicles
Ford Motor Credit is asking the U.S. Bankruptcy Court to allow it to take possession of its vehicles and other collateral held by the Reagor-Dykes Auto Group. In a filing Friday, Ford Credit's legal team argues Reagor-Dykes does not have a reorganization plan "that is in prospect" and its vehicles continue to lose value while sitting on lots across West Texas.
Ford's filing includes a copy of a proposal from the McDougal-Dykes-Ewing Group, investors who emerged in late November to restructure the Auto Group. Prior to that point, it appeared the Auto Group would be sold to a stalking horse bidder.
You can read a copy of this proposal below. It shows the McDougal-Dykes-Ewing Group would invest $20 million cash into Reagor-Dykes dealerships, obtaining 90% equity ownership. The remaining 10% stake would be placed in trust "for the benefit of non-Ford Credit and non-GM Financial creditors holding unsecured claims in the Reagor-Dykes chapter 11 case that are not assumed by the reorganized debtor." Dealerships would primarily be branded "Spike Dykes", according to this copy.
The documents show McDougal-Dykes-Ewing Auto Group would assume the balance owed to Ford Credit, GM Financial and other floor plan financing lenders.
However, in Friday's filing, Ford Credit argues even after it allowed Reagor-Dykes to use $3.1 million of its cash collateral while pursuing a sale of assets over the past few months, it had to offer further assistance.
"Ford Credit took the unusual and risky step of allowing Debtors to sell seventy-two used vehicles and retain all net proceeds from those sales (approximately $1.38 million) to be utilized to continue operations and pay professionals in order to survive to a November 29, 2108 § 363 sale. However, the § 363 sale procedure failed. As a last ditch effort, Debtors advised the Court on November 29, 2018 that it had a framework for a Plan of Reorganization memorialized in a “Memorandum” dated November 28, 2018, a copy of which is attached hereto as Exhibit A (“Memorandum”). Although promised for some time now, as of the filing of this brief, no plan or disclosure statement have been filed.2 At this late date, any plan of reorganization proposed by Debtors is certainly not in “prospect.”
Ford Credit also argues the plan includes "legally impermissible provisions consistent with the Memorandum, such as third-party releases of Bart Reagor and Rick Dykes, it is facially unconfirmable." It states, while the nature and extent of sole shareholders Reagor and Dykes "involvement in the fraudulent activities is being investigated", it's both contrary to law and unfair to release them both with execution of a reorganization plan.
Ford Credit states since a sale of the Auto Group didn't happen and without a confirmable plan of reorganization, it now wants to take possession of its vehicles and other collateral.
The filing notes Reagor-Dykes will likely file a reorganization plan soon. But, Ford Credit does not expect it to work because: "1) it contains impermissible third-party releases; 2) it is conditioned upon Ford Credit providing post-confirmation floorplan financing; and 3) it violates § 1129(b)(2)(B)(ii) of the Bankruptcy Code (the Absolute Priority Rule)".
Ford Motor Credit filed suit against Reagor-Dykes July 31, claiming $116 million owed, later described as perhaps one of the largest types of floor plan financing fraud in U.S. history. August 1 several Reagor-Dykes companies filed for bankruptcy. A few months later, more RDAG companies joined the bankruptcy filing.
At multiple court hearings, Ford Credit consented to Reagor-Dykes using Ford's cash collateral to keep dealerships operating on a bare-bones budget with minimal staff. At each hearing an extension of a few weeks was approved. The latest term of this collateral use runs through Tuesday, Jan. 8, which is when the next hearing is scheduled.
Exhibit A to above filing, copy of reorganization plan:
JAN. 3: Lender asks bankruptcy court to force Reagor-Dykes legal team to produce documents
DEC. 26: UPDATE: Court allows Ford Credit lawsuit to proceed against Bart Reagor, Rick Dykes
DEC. 12: Slow progress reported on Reagor-Dykes customers' TT&L, trade-ins
NOV. 29: McDougal, Ewing and Dykes lead group to purchase Reagor-Dykes assets
NOV. 21 Former Reagor-Dykes CFO requests change of venue in lawsuit
NOV. 20: Toyota, GM file objections in Reagor-Dykes bid process
NOV. 14: State may extend titles for some Reagor-Dykes customers
NOV. 2: Five more Reagor-Dykes entities petition for bankruptcy
OCT. 29: Reagor-Dykes TT&L, trade-in issues remain unresolved; progress reported with some lenders
OCT. 29: Bart Reagor, Reagor Auto Mall claim First Bank & Trust party at fault
OCT. 29: Vista Bank asks to recoup funds in Reagor-Dykes accounts
OCT. 18: No resolution yet on Reagor-Dykes customers' unpaid TT&L, trade-in liens
OCT. 17: More lenders object to Reagor-Dykes' request for TT&L, trade-in payment
OCT. 16: U.S. Bank objects to Reagor-Dykes request for lenders to pay TT&L, trade-ins
OCT. 15: Compromise on vehicles in First Bank & Trust lawsuit v. Reagor Auto Mall
OCT. 15: Judge approves sale of Reagor-Dykes plane; Wells Fargo objects to portion of TT&L motion
OCT. 12: Ford Credit supports part of Reagor-Dykes' request for lenders to pay TT&L, trade-ins
OCT. 12: FirstCapital files counterclaim, motion to dismiss
OCT. 10: Reagor-Dykes aircraft to be sold, pending court approval
OCT. 10: Several filings in Reagor-Dykes bankruptcy case
OCT. 1: KamKad, Reagor-Dykes execute purchase agreement
SEPT. 24: FirstCapital Bank requests First Bank & Trust lawsuit against it, Reagor-Dykes, others move to federal court
SEPT. 21: Judge sets schedule, trial date in Vista Bank v FirstCapital Bank lawsuit
SEPT. 21: Former Reagor-Dykes CFO denies late payments, says Vista Bank attacked him, his family
SEPT. 20: Vista Bank sues former Reagor-Dykes CFO, claims loan default
SEPT. 19: Texas DMV: Reagor-Dykes should promptly resolve title issues
SEPT. 19: Brad, Kenneth Burgess file motion to dismiss Vista Bank lawsuit
SEPT. 18: First Capital Bank files motion to dismiss lawsuit
SEPT. 18: Court approves bid process for Reagor-Dykes Auto Group, extends use of cash collateral
SEPT. 17: Ford Credit, GM object to certain aspects of proposed Reagor-Dykes sale
SEPT. 14: Judge sets trial date in Ford Credit lawsuit vs. Reagor-Dykes
SEPT. 14: Reagor denies Ford Credit's claim vehicles sold out of trust
SEPT. 13: Dykes: Former Reagor-Dykes CFO admits he provided false info to Ford Credit
SEPT. 11: Reagor-Dykes Auto Group requests court to allow sale of company
SEPT. 4: Reagor-Dykes Auto Group establishes process to resolve customer problems
AUG. 31: International Bank of Commerce asks for court to allow it to foreclose on Reagor-Dykes dealerships
AUG. 31: More Reagor-Dykes companies, co-owners may soon file for chapter 11
AUG. 30: Court extends Reagor-Dykes employment of CRO; officer discusses potential dealership buyers
AUG. 29 : International Bank of Commerce asks for loan payment in Reagor-Dykes case
AUG. 29: Ford Credit objects to Reagor-Dykes earlier legal team
AUG. 27: Vista Bank doubles relief request in new federal suit against FirstCapital Bank
AUG. 25: Reagor-Dykes chief restructuring officer hires new legal team
AUG. 25: GM proceeding with termination of Reagor-Dykes Floydada
AUG. 23: Landlords demand rent for Reagor-Dykes dealerships in Lubbock, Plainview
AUG. 20: Ford Credit moves ahead with suit against Reagor, Dykes, some R-D companies
AUG. 18: Reagor-Dykes bankruptcy case: Read court order following Aug. 16 hearing
AUG. 17: Auto dealer claims Reagor-Dykes owes $513,000, vehicles may be in consumers' possession
AUG. 16: Vista Bank sues FirstCapital for $6 million, claims Dykes helped perpetrate check kiting scheme
AUG. 16: Bankruptcy court allows Reagor-Dykes continued use of cash collateral, hiring of CRO
AUG. 15: Reagor-Dykes Auto Group issues written apology
AUG. 14: Loss of Reagor-Dykes Chevrolet in Floydada a potential financial pitfall for city
AUG. 14: Vehicle auction company claims Reagor-Dykes owes it $687,000
AUG. 14: Ford Credit claims Reagor-Dykes is not following court orders; court grants extension to file docs
AUG. 13: U.S. Trustee opposes Reagor-Dykes request to hire chief restructuring officer
AUG. 10: Ford Credit: Reagor-Dykes fraud may be among largest of its type in U.S. history; GM files to terminate Floydada dealership
AUG. 9: Reagor-Dykes questions former CFO’s actions; Contractor claims $700,000 due now
AUG. 7: Former Reagor-Dykes employees claim they were not paid
AUG. 6: Customers concerned over Reagor-Dykes 'unwinding' process
AUG. 6: Ford suit against Reagor-Dykes on hold while bankruptcy case proceeds
AUG. 3: Judge approves Reagor-Dykes employee pay
AUG. 2: Mayor: Downtown Lubbock growth to remain strong regardless of Reagor-Dykes future
INITIAL STORY: Ford Motor Credit sues Reagor-Dykes; R-D files for chapter 11 bankruptcy