Reagor Dykes Auto Group filed for Chapter 11 bankruptcy protection on Wednesday after Ford Motor Credit Company filed a lawsuit claiming it is owed more than $116 million from the dealership.
On Tuesday, Ford Motor Credit Company filed a lawsuit in the U.S. District Court Northern District of Texas Lubbock Division seeking the damages. Reagor Dykes dealerships in Amarillo, Floydada and Plainview were listed in the suit. Also listed in the suit were Bart Reagor and Rick Dykes.
The Snyder dealership, which was open today, is not listed in the suit.
According to the lawsuit, Ford Motor Credit claims the dealerships sold Ford Credit vehicles without sending required payments and submitted false or inaccurate information. The lawsuit included contracts dating back to 2008.
Ford Credit is asking the court to allow the company to take possession of vehicles and is also seeking a temporary restraining order preventing further sales of vehicles at the dealerships listed in the lawsuit.
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 audit finding showed that the dealership transferred 15 vehicles being sold between dealerships.
After the vehicle was sold, the dealership “floorplanned that vehicle with Ford Credit even though it was no longer in inventory, thus obtaining financing payments from Ford Credit under false pretenses.”
The Reagor Dykes Auto Group released a statement after filing the Chapter 11 notice.
“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,” the statement read.
According to court documents, the Snyder dealership is not included in the bankruptcy filing, but the three dealerships connected to the Ford Motor Credit Company lawsuit are included.
A message left seeking comment on the Snyder dealership was not returned.
Chapter 11 bankruptcy allows an individual or corporation to reorganize and restructure debt.
A hearing on the Ford Motor Credit Company case is scheduled for 10 a.m. Wednesday in Lubbock.
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