Timeline of the Reagor Dykes vs. Ford Lawsuit

TIMELINE OF MAJOR EVENTS:

JULY 31 – Ford Motor Credit sues Reagor Dykes for default. The lawsuit alleges Reagor Dykes agreed to pay $41 million. The Ford lawsuit said Reagor Dykes agreed to pay $41 million that was described as “currently due” but the payments were “returned for insufficient funds” or because payment was stopped. The total debt to Ford was described as more than $116 million. The lawsuit states Ford started an audit of Reagor Dykes in June. Ford says the sales dates and other information pertaining to 147 of the 150 cars sold during this audit did not match. Ford accuses Reagor Dykes in some cases of using the same vehicle twice to get financing from Ford.
AUGUST 2 – Some Reagor Dykes Motor Company locations, but not all, file for Chapter 11 bankruptcy, a form of reorganizational bankruptcy.

“The Reagor Dykes Auto Group regrets that it became necessary this morning to seek legal protection for several of its dealerships due to a dispute with one of its lenders. We are doing everything in our power to work through the issues. We are eternally grateful for our loyal employees, customers and friends in Lubbock and the West Texas community.”

AUGUST 3 – After asking for permission, the court rules that Reagor Dykes can pay its employees. Paychecks were cut before the end of the business day that Friday for work that had already been completed.
AUGUST 6 – Reagor Dykes announces that while all locations are open for business, they are operating with limited personnel:

“All locations of Reagor Dykes Auto Group were open and operating on Monday. In compliance with the order of the Bankruptcy Judge issued Friday, the dealerships have placed on leave certain personnel to comply with the budget and avoid exceeding the allowed expenditures agreed upon by Ford Motor Credit. We encourage our loyal customers to come and give us the opportunity to sell them a car.”

On the same day in court, Reagor Dykes and Ford Credit Company make their cases regarding whether or not the non-bankrupt Reagor Dykes locations are able to be sued. Typically, a bankruptcy filing would put the lawsuit on hold. But, since not all Reagor Dykes locations are listed in the bankruptcy filing, Ford argues the lawsuit can move forward. The judge then cancels a hearing set for August 8 on Ford’s request to confiscate collateral property. The judge also gives Ford a deadline of August 17 to amend its lawsuit, and gives the non-bankrupt Reagor Dykes companies until August 31 to respond.
AUGUST 8 – Reagor Dykes files to hire a Chief Restructuring Officer to internally investigate the company. Reagor Dykes says a restructuring officer is needed immediately “because of the departure of the former CFO and the current state of flux in which the Debtors are trying to make certain their financial data can be reliable and relied upon.” Also on this date, Reagor Dykes filed to ask permission to hire BlackBriar Advisors LLC.
AUGUST 13 – The Office of the United States Trustee filed an objection to Reagor Dykes’ motion to hire a CRO. The office states that the jobs outlined by Reagor Dykes in its motion could all be fulfilled by a trustee, stating, “Given the pending motion to appoint a trustee, it appears the better course of action would be to deny the request for a CRO, and have the court direct the appointment of a trustee to manage this case.” At this point, a trustee had not yet been approved to oversee the RD bankruptcy, but Ford made the request.
AUGUST 14 – Ford files more allegations against Reagor Dykes, stating that the company failed to return all demonstrator vehicles; failed to register vehicles sold to consumers; failed to pay off trade-in liens and failed to provide Ford with keys and titles to vehicle inventory.
AUGUST 16 – Reagor Dykes and Ford appear in court and agree to pay employees through August 30. The bankruptcy judge also puts off the decision to appoint a trustee until August 30. Reagor Dykes and Ford agreed to hire BlackBriar to act as a CRO to advise and gather information.
AUGUST 17 – Ford amends its lawsuit. The Reagor Dykes companies that filed for bankruptcy have protection against the lawsuit. But Bart Reagor, Rick Dykes and the non-bankrupt companies are still subject to the lawsuit. The amended lawsuit said RD defaulted on $40,434,000 rather than $41,734,000, and that Reagor Dykes had a total estimated debt of $113,374,000 instead of $116,168,000. A written order was also released, stating in part the CRO should “develop and implement a plan for the sale of all assets and the transfer of all automobile dealership franchise rights.”
AUGUST 23 – An investment company and a real estate company filed a motion in bankruptcy court to compel Reagor Dykes to accept or reject two leases in Southwest Lubbock and another in Plainview. A court date is set for September 19.
AUGUST 24 – David Langston and the law firm of Mullin Hoard and Brown request permission to withdraw as the bankruptcy attorney for a list of Reagor Dykes companies. Langston claimed in court records that MHB was paid a $500,000 retainer. BlackBriar Advisors LLC, the appointed CRO, said it no longer wanted Langston and MHB, wanting to bring in its own legal team, Foley & Lardner.
AUGUST 27 – Liberty Capital Bank in Addison files an objection against Reagor Dykes. Liberty claimed it provided floor-plan financing to Reagor Dykes Auto Mall with a location in Addison. Liberty said the money it provided to RDAM was supposed to pay off the liens on trade-in vehicles or vehicles purchased at auction. On this same day, Ford objects to Reagor Dykes’ request to change attorneys. “Mullin Hoard & Brown L.L.P. did not disclose this payment [the $500,000 retainer] to the Court at the outset of the bankruptcy representation,” Ford said. Ford also implicated that since the retainer was paid out of Rick and Bart’s personal bank accounts, this might cause the law firm to be more loyal to Mr. Reagor and Mr. Dykes instead of being loyal to the Reagor Dykes companies as a whole.
AUGUST 30 – Reagor Dykes receives permission from the court 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 Reagor Dykes dealerships. Mullin Hoard and Brown will also officially withdraw from the case so Schleizer can hire his own legal counsel.
SEPTEMBER 4 – Reagor Dykes begins to offer face-to-face meetings with representatives for customers affected by the case.
SEPTEMBER 7 – The Internal Revenue Service files a notice of appearance in the ongoing Reagor Dykes bankruptcy case, meaning the organization wants to be notified with any updates on the case.
SEPTEMBER 11 – An offer to buy Reagor Dykes is entered into court records for $25,321,520.00. The offer comes from a company called KamKad, which has agreed to act as the stalking horse bidder if the court agrees to auction off Reagor Dykes. A stalking horse bid is a way to make sure assets are not sold for too little. In this case, anyone who wants to purchase the RD companies would have to bid $1 million more than KamKad.
SEPTEMBER 12 – Reagor Dykes requests an expedited hearing on the possible sale of its dealerships.
SEPTEMBER 13 – A bankruptcy judge sets a court hearing for September 18 on the issue of auctioning off the Reagor Dykes dealership. Also on September 13, Rick Dykes enters a written document into court, denying wrongdoing. He accused his own former employee and CFO, Shane Smith, of wrongdoing. The FBI at this point has not confirmed nor denied an investigation regarding Smith or anyone else at Reagor Dykes.
SEPTEMBER 14 – A judge sets the trial date for the case, if both sides cannot reach an agreement beforehand, for February 3, 2020. A list of motions will be due on January 15, 2019. Another list of motions will be due by September 16, 2019 and yet another set will be due by January 13, 2020. Bart Reagor also enters his own statement, separate from Dykes’, into court. While Dykes pointed his finger at former CFO Shane Smith, Bart Reagor did not mention him except to acknowledge he is a former manager within the Reagor Dykes companies. He said in part, “Defendants reserve the right to assert potential counterclaims, to supplement and amend this answer and the affirmative defenses, and to assert any other grounds to deny any recovery to Ford Credit or to add any cross-claim and/or third-party claim.”
SEPTEMBER 17 – Ford files an objection to the proposed sale of Reagor Dykes. Ford does not object to the basic idea of selling 13 RD dealerships. However, Ford said the proposed “stalking horse” bidder does not have a contract with Ford. On the same day, Vista Bank files a document electronically in bankruptcy court that showed Reagor Dykes defaulted on a $2 million loan from June of 2017.
SEPTEMBER 18 – A bankruptcy judge on Tuesday gave permission to sell 13 Reagor Dykes locations at auction, and the judge also approved the KamKad Automotive Group as a so-called stalking-horse bidder. KamKad gets the first bid which will be more than $25 million. Others can bid more for a November 15 auction. The winning bidder gets the properties more-or-less free and clear.
SEPTEMBER 19 – First Bank & Trust sues Reagor Dykes, Bart Reagor, Rick Dykes, Shane Smith, FirstCapital Bank, Sheila Miller, Brad Burgess, and Kenneth Burgess for check kiting. First Bank’s lawsuit filed late Tuesday said Reagor Dykes owes more $1.5 million in bounced checks. The Texas Department of Motor Vehicles file two letters into court on the same day, stating that they have received over 100 complaints from “innocent buyers” that purchased vehicles from Reagor Dykes, but titles were not turned over. The DMV called for these titles to be signed over immediately.
SEPTEMBER 20 – A judge orders car companies to negotiate with KamKad Automotive Group, the approved stalking-horse bidder. Gulf States Toyota, General Motors and Ford Motor Company each previously filed objections to the sale of the Reagor Dykes dealerships, arguing the dealerships cannot be sold to another company without their approval.
SEPTEMBER 24 – The Texas Commission on Environmental Quality filed paperwork on Monday to become an “interested party” in the Reagor Dykes bankruptcy case. TCEQ has not yet put a dollar value on its interest.
OCTOBER 2 – Ford refiles its objection to Mullin Hoard & Brown’s representation and withdrawal from the Reagor Dykes case, again asserting the retainer from August was a “suspect payment.”
OCTOBER 9 – Reagor Dykes requests an extension to its exclusivity period. During first 120 days of a bankruptcy case, the debtor has the exclusive right to file a reorganization plan. The creditors cannot file their own plan during the exclusivity period. The bankruptcy court can extend the time “for good cause” and Reagor Dykes requested 90 more days. Reagor Dykes also files a motion to force banks and other financial institutions to pay off taxes, titles and licenses on vehicles that were purchased in the weeks before RD filed for bankruptcy. The motion said normally TTL (tax, title and license) and any outstanding lien on a trade-in vehicle is paid off in a way that is seamless to the customer. But things have not been ordinary since August 1 when Reagor Dykes filed for bankruptcy. The motion said customers are getting threats of repossession, sometimes from the lender on their new car, sometimes from the lender of their old car, or sometimes both.
OCTOBER 12 – The Texas Department of Motor Vehicles and Ford Motor Company both issued documents in support of innocent customers of Reagor Dykes. Ford says the retail lenders are essentially holding onto Ford’s cash collateral. TxDMV says it supports any relief the court can fashion that would result in the relief to protect innocent consumers.
OCTOBER 18 – A bankruptcy court hears arguments both for and against making retail lenders pay tax, title, license and trade-in liens on vehicles that customers purchased from Reagor Dykes in the days and weeks before August 1. The bankruptcy judge set another court date on the matter for October 29. Court records indicate the amount of money in question is $6.5 million or more.
OCTOBER 29 – The court allows Reagor Dykes to have more time to figure out the title and liens situation.
NOVEMBER 2 – Five more Reagor Dykes companies file for Chapter 11 bankruptcy, bringing the total to 11.