LUBBOCK, Texas (KCBD) - A plan has been drafted to conclude the bankruptcy case for the Reagor-Dykes Auto Group. The hope is it will be completely prepared by the end of July and confirmed by September.
This means there is a timeline that will conclude the case, which has been going on since the beginning of August. Now, nearly a year after the auto group filed for bankruptcy, all that is needed is an entity to sponsor the plan in order to continue to the next steps.
Reagor-Dykes has eyed four entities that could potentially serve as a reorganization sponsor, C. Ashley Ellis, an attorney with the auto group, said during a court hearing on Wednesday.
The four entities, though, required Rick Dykes, a co-owner of the auto group, to serve as an investor in the reorganized entity.
“Mr. Dykes has expressed his willingness to invest in a reorganization entity,” Ellis said.
And on June 14, Dykes formally agreed to retain rights and acquire dealership properties as part of the proposed reorganization effort, she said.
Dykes’ involvement in any reorganization plans was initially rejected by the Ford Motor Credit Company, Reagor-Dykes’ biggest creditor. However, after a remediation meeting in February the company withdrew its objection to Dyke’s involvement.
The auto group was also not able to put in a reorganization proposal until Tax, Title and License issues were resolved. Most of that was dealt with in late April.
“We have some work to do,” Ellis said in court, “ but the puzzle pieces are still in place.”
All entities involved are aware a sponsor may not come through. That is why a proposed first plan, or toggle plan, has been set in place.
Now, there are two options for the auto group.
The first is a restructure plan, in which business with the auto group can continue, but in a non-traditional manner. That would also allow for 10 percent of the company’s equity be placed into a trust for any lenders.
The second plan would be to liquidate all assets, which would basically get rid of everything.
“We believe a restructuring plan will provide more value to all of our creditors than a liquidation plan,” Ellis said.
Throughout this process for the proposed reorganization, Ellis said, the auto group continues to work with creditors and other entities to prepare monthly reports, find a way to repossess vehicles still on lots and sell them, and work to pay the six remaining employees within the company.
Ellis also added those six employees are currently being paid by funds provided solely by Rick Dykes, to keep operating expenses to a bare minimum.
“(Reagor-Dykes Auto Group) has always believed a reorganization is possible and a reorganization is better,” Ellis said.