LUBBOCK, TX (KCBD) - U.S. Bankruptcy Judge Robert Jones approved an application for employment from a law firm that handled the initial stages of the Reagor-Dykes bankruptcy on Friday.
On Aug. 21, after representing the Reagor Dykes group for 21 days, Mullin, Hoard & Brown was fired by the debtors. The hearing on Friday was to determine whether they could be approved by the court.
“This seems to be a shotgun approach in attacking attorneys who were doing their best handling the case under extraordinarily difficult circumstances,” said Judge Robert Jones as he overruled Ford Motor Credit’s objections and approved a motion of employment by Lubbock law firm MHB, employment as Reagor Dykes attorneys for the first three weeks of the organization’s bankruptcy.
Mullin, Hoard and Brown received two checks for $250,000 each, one from Rick Dykes and another from Bart Reagor.
David Langston, a partner at Mullin, Hoard and Brown, testified that these were personal funds. Ford objected to the $500,000 retainer coming from principals of the debtor; however, testimony by Langston and evidence presented by the U.S. Trustee suggested this is not uncommon when the bankrupt entity is closely held.
Ford Motor Credit filed objections to Mullin, Hoard & Brown’s application for employment on a variety of grounds, including a late disclosure by MHB partner David Langston that he has a $1 million investment in the holding company that owns First Capital Bank. First Capital Bank is a related party and possible creditor in the Reagor Dykes bankruptcy.
The testimony presented a picture of three weeks of frenetic activity working the bankruptcy of six entities. The judge called a failure by MHB to meet a disclosure deadline, “excusable error.”
Judge Jones rejected any suggestion that MHB attorneys were not working exclusively in the interests of the debtors, saying, “I’m satisfied they were working day and night. This has been a high-profile, messy, complicated case.”
The law firm must still submit a claim for the court’s approval before it can be paid from that retainer. That matter will be heard at a later date.