Company offering warranties, GAP insurance asking for $665k in unpaid debt from Reagor-Dykes
LUBBOCK, TX (KCBD) - Universal Underwriters Service Corporation, a company who provides protection products for customers buying a vehicle, is asking Reagor-Dykes Auto Group (RDAG) to pay the nearly $665,000 owed to them. Universal states in a motion filed Wednesday that they need RDAG to either pay the outstanding balance or lift the automatic stay so Universal can terminate their agreement with RDAG.
UPDATE: On Thursday, Universal filed a motion to expedite the hearing so the motion can be heard on Sept. 19, during another bankruptcy hearing.
The company, Universal, offers vehicle service contracts, theft deterrent contracts, limited warranty contracts and guaranteed asset protection (GAP) contracts. The products offered by Reagor-Dykes Auto Group are not owned by them, but are owned by Universal.
In court documents filed late Wednesday afternoon, Universal says the money owed is from the sale of a product to a customer buying a vehicle. Reagor-Dykes Auto Group is required to hold the money from the sale of the products in a trust on behalf of Universal. The documents also say the funds are not part of Reagor-Dykes' bankruptcy estate.
The documents also say Reagor-Dykes Auto Group has failed to pay May, June and July.
According to Universal, and court documents, the bill for Universal was not included in the use of cash collateral.
After discussing the matter with the attorneys for Reagor-Dykes, Universal learned the money owed was not kept separate and was incorporated into the Reagor-Dykes general operating account, which is believed to be the same account Reagor-Dykes is using to keep funds for the cash collateral agreement.
Universal is submitting a motion to have Reagor-Dykes pay the amount due and stay current or be in breach of their contracts.
The documents say,"Each time (Reagor-Dykes) solicit and sell Universal's products they are binding Universal to an agreement with third parties, i.e. (Reagor-Dykes') customers." By not transmitting the money for the product to Universal, Reagor-Dykes profit from the misappropriated funds and Universal is "burdened with obligations to said third parties for which it has not been compensated."
Universal adds they have no assurance the money has been used for Reagor-Dykes' personal expenses and/or using it to pay other Reagor-Dykes' creditors.
Universal also adds to the motion if Reagor-Dykes fails to assume the agreement within 14 days, until September 12, they believe the automatic stay should be lifted to allow Universal to terminate the agreement.
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