Judge: Ford Credit may repossess Reagor-Dykes vehicles
U.S. Bankruptcy Judge Robert Jones ruled Thursday Ford Motor Credit is due relief from an automatic stay, compelling Reagor-Dykes Auto Group to comply with Ford Credit repossessing its collateral -- that is, vehicles financed by Ford Motor Credit. The court indicated the parties can still reach an accord despite this order, but if Ford Credit proceeds with repossession, the creditor must identify every vehicle's make, model, year, whether it is new or used, and the vehicle's identification number.
The court waived a 14-day stay, allowing Ford Credit to proceed immediately.
In his ruling, Judge Jones outlined the bankruptcy procedures thus far, including Ford Credit's six extensions of cash collateral funds, the failure of a sale process, and the reorganization plan sponsor "McDougal-Dykes-Ewing Group" and its $8 million payment to Ford Credit. Specific to that, Judge Jones indicated the group's solution provides no provision for exit financing under a new floorplan loan conditioned on Ford Credit's approval. Judge Jones wrote this deal required Ford Credit to release Rick Dykes and Bart Reagor from further liability; Ford Credit's counsel rejected that proposal and asked the court remove Ford Credit from Reagor-Dykes's automatic stay from relief.
A new reorganization plan was submitted January 7. The Judge wrote this plan is similar to the "global solution" (the McDougal-Dykes-Ewing Group plan), but with significant differences; it states Reagor-Dykes disputes Ford Credit's claims. This plan would also allow the secured portion of Reagor-Dykes's debt be satisfied through surrender of the collateral or payment in full; the unsecured portion would share proportionally through litigation proceeds. The Judge indicated this highlights the McDougal-Dykes-Ewing Group's contribution of $20 million, but it does not require Ford Credit release Rick Dykes and Bart Reagor.
"... the plan states that $3 million will be allocated to reimburse retail lenders that pay outstanding TT&L claims ... and liens on trade-ins. (The issue of unpaid TT&L and trade-in debt has plagued the case from the outset.)"
Judge Jones ruled Reagor-Dykes's inventory is much less than the $112 million the auto group owes to Ford Credit alone; he cites a witness that testifies the vehicle inventory is only worth between $60 million and $70 million -- Reagor-Dykes scheduled the value at about $90 million. Both Ford Credit and Reagor-Dykes agree the value is constantly depreciating, perhaps a percent or two a month.
"Ford Credit is not being provided, and has not been offered, any form of adequate protection-- not periodic cash payments, no additional collateral, and no other form of relief that would give Ford Credit the indubitable equivalent of its interest."
The judge ruled, while the vehicles are necessary for an auto dealership to effectively reorganize, there is not a reasonable possibility of a successful reorganization within a reasonable time. Judge Jones finds Reagor-Dykes's plan is contingent on issues that "frankly, make or break the viability of the plan." He cited no prospective lenders to finance its floorplans, and writes Reagor-Dykes has not offered any evidence the McDougal-Dykes-Ewing Group can provide the $20 million capital investment included in the plan.
Judge Jones ruled a "bare proposal is not sufficient" evidence that a plan is in prospect-- crucial to chapter 11 proceedings and their automatic stays from relief.
Given Reagor-Dykes's track record during this case -- the chaos at filing and the extraordinary loss of employees, the lack of capital, the multiple extensions for filing schedules, the changing of counsel, the "pivots" from one concept to another for a plan -- the Court concludes that Reagor-Dykes does not have a "reasonable possibility of a successful reorganization within a reasonable time."
The judge cited Ford Credit's finding that Reagor-Dykes sold 1,100 vehicles "out of trust" worth about $40 million, and those cars and trucks are now gone. "And with this," Judge Jones wrote, "it has hundreds of sales on which the TT&L fees and trade-in liens went unpaid."
"These cases need," the judge ruled, "and perhaps unrealistically so, a prompt resolution. The deferral of attorney's fees and rents and the incurrence of debt post-filing are driving-up administrative expenses. Sufficient cause exists to warrant relief."
JAN. 9: Court approves Reagor-Dykes interim funding
JAN. 8: Reagor-Dykes, Ford Credit argue future of Auto Group in bankruptcy court
JAN. 8: Citing possible criminal investigation, former Reagor-Dykes CFO requests stay on discovery
JAN. 8: Ford Credit: Reagor, Dykes signed guaranties, should pay $112 million+ in relief
JAN. 7: Reagor-Dykes files reorganization plan
JAN. 7: 'Reagor-Dykes is not dead', Auto Group files response to Ford Credit's demands
JAN. 4: With no reorganization plan yet filed, Ford Credit seeks to take possession of Reagor-Dykes vehicles
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