Ford Motor Credit Company sues Reagor-Dykes Dealerships; RD files for bankruptcy
LUBBOCK, TX (KCBD) - According to federal court documents filed on July 31, 2018, Ford Motor Credit Company is suing Reagor-Dykes dealerships, Bart Reagor and Rick Dykes. Ford says the dealerships have an outstanding balance of more than $116 million, and currently more than $41 million is due now.
Ford Motor Credit claims the dealerships have sold Ford Credit vehicles without sending required payments to Ford Credit, have repeatedly submitted false or inaccurate information to Ford Credit and its representatives, are otherwise in default under their financing and security agreements with Ford Credit, have failed to cure their defaults in spite of the opportunity to do so, and have not voluntarily surrendered collateral (vehicles) in their possession that is subject for Ford Credit's security interests.
Ford is also seeking a temporary restraining order to protect against further depletion or dissipation of its collateral and the proceeds the same.
The court document says, "The continued deterioration of Reagor-Dykes Dealerships' financial position, and their inability to cure defaults are believed to exceed $40 million, leaves Ford Credit with no choice but to seek the requested order in order to recover its collateral and otherwise protect its rights as a secured creditor."
The documents also say after a June 2018 audit of the inventory of the Reagor-Dykes Dealerships, Ford Credit undertook an initial analysis of the audit results and sales and registration data from the Texas DMV and other publicly available sources. Ford reviewed sales for 150 reported sales by those dealerships. Ford says they found 147 of those vehicles did not match the sales and/or registration dates reported by the Texas DMV. They claim there is an average violation discrepancy of 55 days across all dealerships. In other words, the Ford analysis shows 147 vehicles sold by the dealerships, on average, 55 days before the date upon which the dealerships paid them off. The dealerships were able to delay making payments to Ford Credit for extended periods of time, well beyond the seven processing days permitted under their agreements with Ford Credit.
The suit claims there were also instances where RD Dealerships submitted information to Ford Credit to obtain floorplan financing at one of the dealerships, and then did so again at a second dealership - thereby obtaining double financing from Ford Credit.
The lawsuit also says in 15 instances, RD Dealerships transferred a vehicle that was being sold from one dealership to another and then, after the vehicle was sold, floorplanned the vehicle with Ford Credit even though it was no longer in inventory, thus obtaining financing payments from Ford Credit under false pretenses.
After the defaults were discovered, the Reagor-Dykes Dealerships authorized electronic funds transfers to Ford Credit totaling more than $41 million. Those have been returned as insufficient funds because payment on at least some of them have been stopped by defendants, according to the court documents.
Ford claims RD Dealerships are not voluntarily surrendering the vehicles and say that non-action is harming Ford Credit and the value of the collateral is rapidly depreciating.
A Regional Manager for Ford Motor Credit told the court that when he called Bart Reagor on Saturday evening to discuss the results of their audit and demand the return of their cars, Reagor made a violent threat.
The manager reported the threat to Ford management, who sent their security team to meet with Bart Reagor and Rick Dykes on Monday.
This Regional Manager told the court that managers from two dealerships said they did not intend to cooperate with inventory controls or monitoring of their incoming mail.
Ford says the dealerships have since agreed to cooperate on some of these issues but have not agreed to cooperate on others.
Ford Credit told the court that electronic fund transfers authorized by the dealerships last week have been returned because of insufficient funds or because stop payments were issued by the Reagor-Dykes dealerships.
An order scheduling a hearing for 10 a.m. on Aug. 8 at the Federal Building has also been filed.
As of August 1, 2018, Reagor-Dykes Dealerships filed Chapter 11 bankruptcy for multiple locations across Lubbock, Amarillo and other parts of the south plains.
Rick Dykes and Bart Reagor issued a statement this afternoon:
The Reagor Dykes Auto Group regrets that it became necessary this morning to seek legal protection for several of its dealerships due to a dispute with one of its lenders. We are doing everything in our power to work through the issues. We are eternally grateful for our loyal employees, customers and friends in Lubbock and the West Texas community.
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