During a hearing Thursday morning, the office of U.S. Trustee objected to certain aspects of Reagor Dykes (RD) having a Chief Restructuring Officer.
A bankruptcy judge overruled the objection. RD has permission to use a Chief Restructuring Officer for some tasks, mostly to replace former Chief Financial Officer Shane Smith.
The CRO, Robert Schleizer with BlackBriar Advisors LLC, testified in the hearing. Schleizer said three potential buyers were found for the RD dealerships.
Schleizer said when he and his team first arrived, the situation was pure chaos with 900 transactions up in the air. He said checks bounced, titles were not cleared, customers had cars without titles, but progress has been made since then.
Schleizer said his team has been working 16 hours per day or more with no weekend breaks to solve problems.
Schleizer said the dealerships have “tremendous enterprise value” and he hopes to be able to announce potential buyers and bid procedures to the bankruptcy court by mid-September.
Schleizer said even though the RD dealerships are currently in chapter 11 bankruptcy, they are forecasting sales of 19 vehicles per week.
He also said rent has not yet been paid for the various dealerships and that’s an issue he’s working to analyze.
During the same hearing, a bankruptcy judge ruled David Langston and the law firm of Mullin Hoard & Brown can withdraw as the attorney for Reagor Dykes.
Whether the law firm can be paid for the work it did between August 1 and August 22 is still another matter. That issue was put off for another date.
Ford Motor Credit Company objected to Mullin Hoard & Brown representing Reagor Dykes (RD). Prior to the hearing, Ford said in court records that Mullin Hoard & Brown had a $500,000 retainer by Bart Reagor and Rick Dykes.
If the law firm does get paid, the money would come from the retainer. Ford said the law firm’s loyalty therefore would be to Mr. Reagor and Mr. Dykes rather than the Reagor Dykes companies.
Ford also said Mullin Hoard & Brown failed to file all the proper disclosures up front. Langston addressed the issue during the hearing. He said lawyers at the firm have been working 16 to 18 hours per day in a whirlwind of activity.
“This is an issue of urgency for the law firm,” Langston said.
The bankruptcy judge said he needs more time to study the issue but is not interested in “gotcha litigation.”
Mullin Hoard and Brown will withdraw from the case so that the Chief Restructuring Officer, Schleizer, can hire his own legal counsel.