LUBBOCK, Texas (KCBD) - The Federal Bankruptcy judge granted a request for an expedited hearing on Reagor-Dykes Auto Group expedited motion for approval of compromise and settlement with FirstBank & Trust.
The motion was filed Wednesday.
The motion states since RDAG filed Chapter 11 bankruptcies, they have been at odds with FirstBank & Trust on a number of issues including cash-collateral, third party debtor-in-possession financing issues, disclosure statement and plan issues, and conversion issues. According to the court documents filed today, RDAG accused FirstBank of being involved in the financial scheme run by former RDAG CFO Shane Smith.
FirstBank believes RDAG should convert their cases to Chapter 7. RDAG believe it is in the best interest for them to stay in chapter 11.
After engaging in an informal discovery and forming opinions about the various disputes between them, both RDAG and FirstBank decided to explore the possibility of a global settlement.
The motion states, “After spirited and extensive negotiations,” RDAG and FirstBank have agreed to a global settlement. A hearing is scheduled for November 12, 2019 at 1:30 p.m.
- The debtors and First Bank will immediately suspend without prejudice all litigation between them, including First Bank’s pending motion to convert the Reagor-Dykes Chapter 11 cases to chapter 7 upon the court’s order granting continuance thereof. If the bankruptcy court approves the agreement, then FirstBank will withdraw its motion to convert. Such withdraw will be with prejudice if no appeal of the approval order is timely filed.
- FirstBank will vote to accept the chapter 11 plan proposed by the debtors and accept subordination of its claims and the avoidance of its security interests against property of a Reagor-Dykes Estate. That vote will be held in escrow pending this court’s approval of the settlement. Upon such approval, FirstBank’s vote will be counted as a timely vote. If this court does not approve this agreement, then the Reagor-Dykes estate shall immediately return FirstBank’s ballot to FirstBank, and such ballot, subordination, and stipulation to avoidance shall be null and void; in which case, FirstBank would retain all rights to vote to reject and object to confirmation of any plan of reorganization.
- The debtors release FirstBank and its current and past officers and directors and their representatives from any and all claims, causes of action, and rights to payment that could be asserted by the debtors.
The court document also states, “The debtors believe that resolution of the disputes is a key step toward achieving the ultimate goal of confirmation. The proposed resolution protects the Reagor-Dykes estate, benefits the creditors and parties in interest, facilitates approval of any chapter 11 plan proposed by the debtors, and shows meaningful progress toward case resolution.”