Reagor-Dykes Auto Group employees at nine dealerships were paid on Friday.
A federal bankruptcy judge agreed to allow Reagor-Dykes to transfer $350,000 from an investment account and pay their employees, even though Ford Motor Credit Company objected.
On Thursday, the auto group filed an emergency motion in U.S. Bankruptcy Court in Lubbock to use money that was invested in accounts with American Century Investments. Court documents stated the money was profit the company had earned over the years.
Reagor-Dykes wanted to use the money to pay payroll expenses as well as day-to-day expenses, including utilities, taxes, rent, repairs and maintenance.
Court documents stated the money would be used at Spike Dykes Ford Lincoln in Lamesa, Reagor-Dykes Auto Mall in Midland, Reagor-Dykes Mitsubishi and Reagor-Dykes South, both in Lubbock, Reagor-Dykes Amarillo and Reagor-Dykes Mitsubishi, both in Amarillo, Reagor-Dykes Ford Lincoln Plainview and Reagor-Dykes Toyota, both in Plainview and Reagor-Dykes Chevrolet in Floydada. The dealerships have a combined 404 employees.
The Snyder dealership was not among the company’s dealerships listed in the emergency motion. However, the auto group decided to close all of its dealerships through the weekend. They will reopen on Monday.
Court documents stated that the auto group moved the invested money into a debtor-in-possession account.
Reagor-Dykes has “an immediate need to use this cash to pay its employees, pay for expenses arising in the ordinary course of … business, and pay for other supplies vital to their operations,” court documents stated.
If the auto group is not allowed to use the money, it would “suffer immediate and irreparable harm … and will have no alternative but to close their doors, discontinue their operations and liquidate their assets.”
In Ford’s objection, documents stated the credit company did not consent to allow the auto group to use cash collateral, and has specifically demanded that Reagor-Dykes segregate and account for all cash collateral sales proceeds since the filing of the bankruptcy.
Ford Credit believes there is no equity in the collateral and no “equity cushion” for adequate protection.
The emergency motion was filed one day after the auto group filed for Chapter 11 bankruptcy protection.
Reagor-Dykes filed for the protection after Ford Motor Credit Company filed a lawsuit in U.S. District Court seeking $116 million it is owed from the auto group.
The Snyder dealership was not listed in the Ford lawsuit or bankruptcy filing.
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 of further sales of vehicles.
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