On Friday, the Texas Department of Motor Vehicles and Ford Motor Credit Company both issued documents in support of innocent customers of Reagor Dykes. Reagor Dykes filed for bankruptcy on August 1.
Reagor Dykes was then placed under the control of a chief restructuring officer (CRO) after the bankruptcy started.
The CRO filed a motion this week to force banks and other retail lenders to pay off tax, title and license (TTL) and trade-in liens. If approved, this will allow customers to register their cars and stop getting collection calls for money they already paid.
Here’s how this came about: Ordinarily, customers would get money from a lender and use that money to pay Reagor Dykes. Reagor Dykes would then write checks for TTL and trade-ins. But ordinary circumstances came to a halt when Reagor Dykes filed for bankruptcy.
Reagor Dykes bounced millions of dollars in checks to local banks. The TTL and trade-in liens went unpaid. Banks refused to release their claims on vehicle titles. Customers in some cases were made to pay for both their new car and their trade-in car at the same time.
“TxDMV supports any relief the Court can fashion that would result in the relief sought by the Motion to protect innocent consumers,” the Texas Department of Motor Vehicles said Friday in court records.
Ford went a step further than that. Ford said Reagor Dykes defaulted on roughly $40 million, and owes $116 million or more. Ford said the retail lenders are essentially holding onto Ford’s cash collateral.
Ford also said after the bankruptcy, lenders took money from customers and put those funds into Reagor Dykes bank accounts. Ford said that needs to stop because those are pre-bankruptcy bank accounts.
Not only that, but Ford wants those lenders to hand over money that Reagor Dykes customers paid after the bankruptcy was filed.
“Ford Credit has taken the extra step of ceasing any collection efforts with respect to the lien obligations on vehicles its customers traded-in to [Reagor Dykes],” Ford said.
On behalf of Reagor Dykes customers, Ford said “Under the circumstances, the relief sought … is fair, equitable and required by Texas law.”
The bankruptcy court will hear arguments on this matter on October 18 at 10:00 a.m.
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