Proposed settlement would release Rick Dykes in RDAG bankruptcy case
LUBBOCK, Texas (KCBD) – A proposed settlement filed in court Thursday by Reagor-Dykes Motors, Rick Dykes and supported by the Texas Attorney General, would release Rick Dykes from all financial claims and/or causes of action in the Reagor-Dykes bankruptcy case. The settlement states that Dykes would pay $100,000 in addition to the $1.8 million in expenses he claims to have previously incurred in administrative costs in the case. Dykes would agree to drop his claims seeking reimbursement for those expenses.
The motion states this settlement will function in conjunction with the RDAG Chapter 11 (liquidating) plan. The court hearing that could have decided whether the Reagor-Dykes estate stays in reorganization or is liquidated under Chapter 7 bankruptcy law has been continued until March 24, 2020.
RELATED STORY: RDAG bankruptcy hearing continued until March
This settlement is in addition to the $58 million Dykes has agreed to pay Ford Motor Credit.
The proposed settlement would also put remaining customer issues, 108 cases, in the hands of a Consumer Ombudsman who would have the power to resolve them with the cooperation of debtors. Pending approval by the court, the Consumer Ombudsman would work with debtors to resolve tax, title, and license issues, making sure customers were able to get a clean title to their vehicles.
The settlement includes a $100,000 contribution from Rick Dykes for the Consumer Ombudsman to resolve the consumer issues, which is in addition to Dykes’ more than $1.8 million in administrative expense claim. In addition, the Creditors Trustee will direct and earmark 10 percent of all litigation proceeds up to $400,000, solely and specifically for the Consumer Ombudsman’s use in resolving consumer issues.
The Consumer Ombudsman’s fees would be capped at $75,000 unless specific milestones are reached. The Consumer Ombudsman would receive a $5,000 bonus for every milestone reached; 25 cases resolved every six months. The Consumer Ombudsman will also file a report with the bankruptcy court every 90 days and after each report, a list of Notice of Resolution of Consumer Title Issues would be posted in the Lubbock newspaper. Any remaining funds will be returned to the RDAG estate to distribute to creditors.
Per the terms of this agreement, Dykes would “release all of his pre- and post-petition claims against the Debtors and their Estates, including, but not limited to, his administrative expense claim, which is currently $1,874,511.06 and increasing with additional post-petition advances.”
"In exchange for Mr. Dykes’ cooperation and foregoing contributions, the Debtors agree to globally release Mr. Dykes in full and final satisfaction and settlement of all pre and post-petition claims and/or causes of action that the Debtors and its Estates hold against Mr. Dykes."
The settlement states: The Attorney General has reviewed the terms of this Settlement Agreement and has been actively engaged in its negotiation and finalization. The Attorney General is in support of this Settlement Agreement and has agreed to cooperate with the Debtors, Mr. Dykes and the Creditors Trustee in effectuating the terms. With this cooperation, the Attorney General, and all of its affiliates and related entities over which the Attorney General exercises control or decision making or regulatory authority, has agreed to release any claims against the Debtors’ Estates arising out of or relating to consumer transactions.
The motion for the settlement will have to be approved by the court.
Whatever the court approves, this is a civil settlement. The criminal case against Reagor-Dykes Auto Group continues in Lubbock Federal Court.
MORE: REAGOR DYKES COVERAGE
Copyright 2020 KCBD. All rights reserved.