LUBBOCK, TX (KCBD) - In a federal courtroom filled with mostly attorneys and members of the media, Judge Robert Jones approved Reagor-Dykes' request for immediate use of cash collateral to continue operating.
The hearing Wednesday afternoon keeps Reagor-Dykes in business while they attempt to come out of bankruptcy.
It will allow use of $1 million in collateral to pay employees and expenses for the auto group through the end of January.
The money is being put up as a loan from Bart Reagor and Rick Dykes' personal funds.
Part of the money would be used to pay insurances on vehicles currently on Reagor-Dykes lots as well as insurance premiums for employees that are now due. Another part would pay rent for two facilities that attorneys say is due Wednesday.
Payroll and other items including resolving tax, title and license issues would make up much of the remainder.
Attorneys for Reagor-Dykes report they are currently in negotiations with multiple banks, including VIsta Bank, First Capital and others to release just short of $3 million dollars in frozen funds for Reagor-Dykes to use instead of needing to borrow additional money.
A representative of Laredo-based International Bank of Commerce reports they are currently sorting through funds to try and work out a resolution with RDAG.
The representative said IBC Bank officers, including the CEO, had flown to Lubbock Wednesday to meet with the planned sponsor group, McDougal-Dykes-Ewing, to outline their borrowing plan moving forward.
Judge Jones asked attorneys if part of the money would come from the Mullin, Hoard & Brown retainer, and if the full $1 million will be loaned automatically or if it will be a line of credit? RDAG attorneys said it will be automatic.
“If the court were to rule tomorrow to grant the stay relief, what happens with the funds?” asked Jones.
Ford Motor Credit’s attorney responded by telling the court “I don’t see how that can be dispersed without a court order today,” adding an MHB representative said they were ready to do that if so ordered.
MHB’s representative then approached, confirming they are ready to release the money to Reagor and Dykes minus their fees.
Their part would be more than $250,000.
The United States Trustees office, speaking by telephone, apologized to the court in their delays due to government shutdown, but that they had no objection to moving forward with the plan as laid out.
“It is in debtors best interest to release the funds,” Jones ruled, approving the interim usage until the next RDAG hearing on Jan. 23.
Attorneys expect a ruling on the proposed McDougal-Dykes-Ewing reorganization, and Ford’s stay motion some time next week.