Judge rules Reagor-Dykes can use restructuring officer

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A federal judge in Lubbock ruled today that Reagor-Dykes Auto Group can employ a chief restructuring officer (CR)) as part of its Chapter 11 bankruptcy reorganization.
Reagor-Dykes, which owns an automobile dealership in Snyder, filed for Chapter 11 bankruptcy protection after Ford Motor Credit Company filed a lawsuit seeking $116 million it claimed it is owed from the auto group. The Snyder dealership is not listed in the lawsuit or bankruptcy filing.
The auto group wanted to employ a CRO to investigate actions by its former chief financial officer, the company’s owners and anyone who worked for the group after it was revealed Reagor-Dykes owed Ford Motor Credit more than $114 million. The CRO takes the place of the chief financial officer, court filings stated.
The U.S. Department of Justice had objected to the action, stating that the CRO’s duties — investigating Reagor-Dykes’ prior financial transactions and their officers and owners — more properly belonged to a Chapter 11 trustee or an examiner.
U.S. District Judge Robert Ford ruled today that Reagor-Dykes would be allowed to hire a CRO through Blackbriar Advisors, LLC. 
The judge also allowed the auto group to continue using collateral cash in its budget to pay employees.
According to the lawsuit filed by Ford Motor Credit last month, the dealerships sold Ford Credit vehicles without sending required payments and submitted false or inaccurate information. The lawsuit included contracts dating back to 2008.
Court documents stated that “by providing Ford Credit with false and/or incorrect information concerning the sales date of certain vehicles, the Reagor-Dykes Dealerships were able to avoid and/or delay paying Ford Credit the amounts owed to it for such vehicles.”
A June 2018 audit of 150 sales was included in the lawsuit and it found that 147 of the vehicle sales did not match the registration dates reported by the Texas Department of Motor Vehicles or other publicly-available sources. 
Court documents state that the discrepancy between the sale date and registration date was 55 days on average.
“In other words, the initial analysis that Ford Credit performed indicated that 147 of the 150 vehicle sold by the dealerships were sold, on average 55 days before the date upon which the dealerships paid them off,” the lawsuit stated.
Those payments are expected to be made within seven days, media reports stated.
Another hearing is scheduled for Aug. 30.