LUBBOCK, TX (KCBD) - Judge Robert Jones approved an expedited hearing request by the Reagor-Dykes Auto Group seeking approval to name KamKad Automotive as a “stalking-horse bidder” and to allow the competitive bid process to begin in RDAG’s bankruptcy case.
A stalking horse offer, agreement, or bid is an attempt by a bankrupt debtor, in this case, Reagor-Dykes Auto Group, to test the market for their assets in advance of an auction of them. The intent is to maximize the value of its assets or avoid low bids, as part of (or before) a court auction.
While entering a stalking horse offer, RDAG can offer bidding protections such as breakup fees to its best bidder before the auction. These incentives enhance the value of the offering for the bidder which might lead to a better price offer before the auction begins. This higher offer is now the starting offer for the auction and may result in benefiting the debtor and its estate.
The documents say KamKad has until Sept. 21 to pay a $1 million deposit. If approved as the stalking-horse bidder, KamKad will pay the $1,000,000 good-faith deposit into an interest-bearing escrow account. The stalking-horse bid from KamKad includes $25,321,520 in cash plus assumed liabilities and the payoff of a to-be-determined amount owed to Ford Motor Credit Company.
With the Stalking Horse Bidder and a minimum purchase price now in place, Reagor-Dykes Auto Group believes that it is a proper exercise of its business judgment to implement the competitive bidding process.
Reagor-Dykes Auto Group seeks the court's approval of a proposed sale transaction and related Bid Procedures so that it could solicit competing offers for the Assets and the Business.
The expedited hearing on this matter will take place Tuesday, Sept. 18.
RDAG is asking for the sale hearing to be held on Nov. 28, with a suggested close deadline of Nov. 30.
KamKad issued this statement on Tuesday afternoon: