LUBBOCK, Texas (KCBD) - Businesses and individuals who were victims of fraudulent actions by employees of Reagor-Dykes Auto Group may be closer to receiving compensation after the third amended Chapter 11 liquidation plan was filed Tuesday.
The plan, approved by a judge in a hearing Thursday, seeks to “wind down operations” of the eight RDAG car dealerships in 13 locations and liquidate all collateral, transferring all causes of action to a “Creditors Trust.”
A Creditors Trust is established in certain bankruptcy cases to liquidate assets and distribute proceeds from that liquidation to the Trust Beneficiaries.
Under this plan, all holders of administrative claims will be paid directly from cash out of the liquidation, and those who hold unsecured claims will receive a “beneficial interest” equal to the amount divided by share, with holders of unsecured claims from Ford Credit and General Motors Financial, as well as unsecured claims from Bart Reagor himself.
The estimated amount of unsecured claims of Reagor and his former partner, Rick Dykes, is at least $1.8 million, according to the plan. However, if the plan is approved, Rick Dykes would not receive a distribution, as he dropped those claims in a settlement in February of this year.
Upon confirmation of the plan, the Creditors Trust will be set up and a Trustee will be appointed: “All Assets, including Causes of Action, all rights to challenge the extent, priority and validity of alleged liens, and all Collateral not surrendered under the terms of this Plan,” will be transferred to the Creditors Trust and the Creditors Trustee.
With this Creditors Trust comes an effective date on the first business day after all conditions to the plan have been met. From there, the Creditors Trust receives rights to the assets of the Trust, including the right to consent or object to claims. The Trustee will also have access to Reagor-Dykes’ books and records.
The Creditors Trustee would be approved by the Bankruptcy Court at the confirmation hearing for this liquidation plan.
18 classes of individuals who may hold claims in this liquidation are established in this plan, with three of these intentionally left blank on the document.
The first class, labeled “Priority non-tax claims” will receive cash from the Creditors Trust on the effective date, while the second class, “9019 Lubbock County claim,” will receive cash as soon as “reasonably practicable.”
The latter class refers to an order granting the Amended Motion for Approval of Settlement and Compromise with Lubbock County Tax Assessor-Collector Under Bankruptcy Rule 9019.
The next six classes are comprised of claims from Ford Credit, GM Financial, First Capital Bank, First Bank and Trust, AIM Bank and Vista Bank, secured by filing before the petition date.
Ford Credit will be paid from the surrender of collateral by RDAG. GM Financial reached a settlement with RDAG in April to assign claims they hold against AIM Bank estimated at a value of around $3.1 million, retaining the right to 50 percent of proceeds and waiving further distribution from this plan.
First Capital Bank and AIM Bank will also be paid through surrender of collateral, while this plan will satisfy settlements with First Bank and Trust and Vista Bank.
Other secured claims will be paid by surrender of collateral.
The plan states unsecured claims will be settled by a divided Pro Rata share, between these claimants combined with unsecured claims from Ford, GM and Bart Reagor.
All allowed claimants, except non-tax claims and intercompany claims, will be entitled to a vote whether to accept or reject this plan.
As soon after the effective date as possible, as the liquidation is completed and allowed claims are satisfied, the Creditors Trustee will file a final decree to close the bankruptcy case.
The settlements in bankruptcy court will not absolve the criminal proceedings for 13 former Reagor-Dykes employees who have pleaded guilty in federal court in connection to the case that has now extended litigation more than two years.