Reagor-Dykes Auto Group related court cases saw developments last week, and officials from the Texas auto dealer and its creditors will again be in bankruptcy court Wednesday and Thursday this week to consider existing and new issues.
Paying outstanding customer-related fees
A motion to authorize retail lenders to pay outstanding tax, title and license fees and trade-lien payments was filed on Oct. 10, in an effort to alleviate troubles faced by hundreds of impacted customers. The motion will be considered during the Thursday court hearing.
Reagor-Dykes financing and credit lines were frozen once the dealership filed for Chapter 11 bankruptcy on Aug. 1. Court documents state that after filing for bankruptcy, Reagor-Dykes learned not all recently processed tax, title and license fees and trade-lien payoffs had been paid, going against standard procedure.
Affected consumers have been unable to register their vehicle and have worried about repossession. Some trade-in customers have been asked to pay two car payments - one for the new vehicle, one for the old. The Texas Department of Motor Vehicles previously stated in court documents that it had received over 100 consumer complaints about these issues since August.
The debtors requested in the court documents that all lenders who hold titles related to Reagor-Dykes provide a list of the property, all retail lender pay fees in accordance with their obligations under a legal rule instated to protect consumers and that negative marks on affected consumers' credit be removed.
Contracts were transferred to credit lenders post-petition, which is why they are being asked to pay these fees in the best interests of consumers.
As of Friday evening, creditor Ford Motor Credit Co. stated in its response that it has largely resolved its consumer-related issues. The TxDMV filed a response saying it supported any effort to resolve consumer concerns.
A motion that would allow the still-open dealerships to accept vehicle trade-ins will also be considered at the Thursday hearing.
The trade-ins would technically be purchased by KamKad Automotive Holdings, the "stalking horse" bidder in the ongoing sale of Reagor-Dykes dealerships.
The dealerships have not been able to purchase trade-in vehicles since August and have been completing sales on a cash-only basis or with financing pre-obtained by buyers.
The court documents state Reagor-Dykes hopes this will "kick start" business.
Selling of private plane
Madison Funding, an interested party in the bankruptcy proceedings, filed a motion asking for the court's permission to sell a private airplane owned by a Reagor-Dykes affiliate.
The 1995 Cessna Citation ULTRA Model 560 Airplane was purchased by R.D. Executive Travel in 2016 for $917,500. Madison Funding provided a loan for the purchase, which the business has defaulted on.
Counsel for Reagor-Dykes and an attorney for the U.S. Trustee approved of the sale. Objections to the sale are due later this month.
FirstCapital files counterclaim, dismissal in First Bank & trust case
FirstCapital Bank of Texas filed a counterclaim and a motion to dismiss a lawsuit brought by First Bank & Trust claiming Reagor-Dykes related fraud.
The original lawsuit claims FirstCapital helped Reagor-Dykes perpetrate an illegal check kiting scheme and used insider information to protect itself from the effects of the dealership's bankruptcy. Rick Dykes was an advisory board member, major shareholder and former director at FirstCapital.
In the counterclaim, FirstCapital contends that First Bank intentionally and wrongfully kept at least $3 million in proceeds from vehicles that were sold by Reagor Auto Mall, which received credit from First Bank.
FirstCapital argues that those proceeds should have been paid to FirstCapital under a state filing law that gave FirstCapital Bank the priority lien position as to all Reagor Auto Mall vehicles and the proceeds from the sale of those vehicles, reads a statement from FirstCapital.
Under Texas law, lenders are entitled to proceeds in the order they have filed financing statements with the state. FirstCapital first filed its paperwork in 2007, and First Bank’s filing was not made until 2017. This placed FirstCapital in a first and prior position to collect on loan repayments whenever vehicles were sold by Reagor Auto Mall.
The suit focuses on the proceeds of vehicles that were sold by Reagor Auto Mall over at least the last two years, the FirstCapital remark states.