Vista Bank agrees to pay $7.5M, drops all claims and demands in RDAG case

Vista Bank agrees to pay $7.5M, drops all claims and demands in RDAG case
Court documents also describe years of emails between RDAG CFO Shane Smith and bank officers regarding overdrafts and unconventional hours kept so that after-hours bank deposits could be made by RDAG suggesting a causal relationship between the favors done for Steinmetz and the bank’s habitual tolerance of RDAG overdrafts. (Source: RDAG, Vista Bank)

LUBBOCK, Texas (KCBD) - Vista Bank has agreed to settle with RDAG and pay $7.5 million to the RDAG bankruptcy estate. Vista Bank also forfeits all claims, demands and any future distribution of assets that may result from the administration of the RDAG bankruptcy estate case.

A previous filing set those claims at more than $15 million.

This settlement was filed Tuesday evening, on the eve of the hearing to decide whether to liquidate the Reagor-Dykes companies or to keep it in reorganization. That hearing began 9 a.m. Wednesday.

Related Story: Attorney General weighs in on Reagor Dykes case

The agreement also comes two weeks after the the court appointed Special Litigation Counsel in the bankruptcy case, Andrew Seger, filed documents claiming Vista Bank “benefited from and actively facilitated the fraud" that led to the collapse of the auto giant.

If approved, the settlement would further protect Vista Bank against actions by the bankruptcy court.

A statement from Vista Bank’s counsel was released Wednesday morning saying:

“Vista Bank is pleased to have this dispute behind them after reaching a mutual resolution. While there was no wrongdoing by Vista Bank, my client chose to eliminate the opportunity cost associated with prolonged litigation by resolving several no-fault claims. In conclusion, today’s resolution allows Vista Bank to do what they do best, focus on their clients and the communities they serve.” – Fernando Bustos

In arguing for approval of the agreement the filings states:

The Proposed Settlement likewise saves the Estates from incurring additional indirect cost and expense as set forth below in assisting the Special Litigation Counsel in prosecuting the Disputes. The Proposed Settlement will deliver a substantial cash payment Estates and will result in subordination of significant filed claims. Further, it also provides the Estate with needed certainty on the disputes and litigation against Vista Bank. Finally, the Proposed Settlement is the result of arms-length, good-faith, and extensive negotiations which occurred over several months, which included the assistance of a mediator, and between and among the Estate Parties and Vista Bank. Accordingly, the Debtors believes that the Proposed Settlement is in the best interests of the Estate under the circumstances and serves the “paramount interests” of the creditors.

The agreement must be approved by the court.

A hearing on whether to continue to pursue reorganization or to liquidate is being held now in U.S. Bankruptcy Court.

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