LUBBOCK COUNTY, TX (KCBD) - Reagor-Dykes returns to bankruptcy court on Aug. 16. Lubbock Attorney Fernando Bustos takes us through what we can expect as Ford's lawsuit goes forward.
"From what I understand, Reagor-Dykes employs about 700 people and they did about $700 million in sales last year. So, it is a big corporate citizen here in Lubbock and it will affect a lot of people if things do not go well," Fernando Bustos, with Bustos Law Firm explains.
In July, Ford conducted a surprise audit, and what it found began the dealerships present troubles. Two days later, on July 31, Ford Motor Credit Company filed a lawsuit against the Reagor-Dykes dealership. One day later, Reagor-Dykes files for Chapter 11 Bankruptcy
"A Chapter 11 bankruptcy is kind of like a controlled bankruptcy. The person is saying 'Hey, my business is in trouble. I need to reorganize my debts but I still want to be in control of my company and I want to continue running my company.' That is what Reagor-Dykes is doing."
An Aug. 8 hearing was vacated, in an effort to more efficiently handle the bankruptcy hearing.
"Judge Cummings, after the bankruptcy got filed, he realized that the car dealerships that are in bankruptcy can no longer actively be part of his federal lawsuit," Bustos said. "So he put a timeout on his lawsuit and he severed those bankrupt parties out of his case, so they can just take care of their bankruptcy."
This is where the two legal actions take off on separate timelines.
"The next bankruptcy meeting will be kind of a part two to the first hearing. Reagor-Dykes is going to ask for additional permission to be able to use their cash to finance their regular operations, to make payroll and to keep the doors open. Ford Motor Credit was trying to fight against that. So basically, it is another 'mother, may I' hearing."
Then the next day, a hearing is scheduled for the lawsuit, but this hearing will not involve those in the current bankruptcy hearing.
Bustos said it will be "...dealing with its claims only against the people who are not in bankruptcy. They have got to tell the court what they want to do with those dealerships and Mr. Reagor and Mr. Dykes, who are not in bankruptcy. That amended lawsuit has to be filed by Aug. 17."
Then back in bankruptcy court, on Sept. 6, there will be a first meeting of the creditors.
Bustos says, "Then, on September 17th, again in bankruptcy court, there will be another hearing to see if Reagor-Dykes can have continued permission from the bankruptcy court to use its available cash to continue running the businesses as they have been. Those are three things coming up here."
During the interview, Bustos also discussed other tough questions being asked, like the possibility of criminal charges.
He said, "Criminal charges, that's a completely separate track all of its own. The United States Attorney's Office is in charge of deciding what types of charges to bring, if any, against any individuals. They run their own investigation. They do it in secret."
But most importantly, "This affects a lot of people. It affects employees. It affects customers. It affects citizens here in Lubbock. When one of our big businesses or any of our businesses fail, it's hard for those families.