Ford Motor Credit Company on Tuesday filed an objection in bankruptcy records against Reagor Dykes.
A list of Reagor Dykes (RD) companies filed for reorganizational bankruptcy on August 1 shortly after Ford accused RD of defaulting on $40 million or more of debt.
Later, Ford accused RD of outright fraud. RD has acknowledged in bankruptcy records that there is a need to investigate possible wrongdoing by the company’s former Chief Financial Officer. And RD acknowledged that even the owners, Bart Reagor and Rick Dykes, should be investigated “in the name of transparency.”
RD also recently requested the bankruptcy judge’s permission to hire a Chief Restructuring Officer. The CRO would perform certain duties of the CFO and also investigate what happened leading up to the bankruptcy.
The office of United States Trustee objected on Monday to the idea of a CRO, saying it would be better to appoint a trustee over RD. Ford on Tuesday also said a trustee would be better.
Ford claimed in the latest bankruptcy records that even now RD is not living up to its obligations. In the first week of August, RD was allowed permission to pay employees and other immediate expenses but there were strings attached.
Ford said RD failed to return all demonstrator vehicles; failed to register vehicles sold to consumers; failed to pay off trade-in liens and failed to provide Ford with keys and titles to vehicle inventory.
The following is one paragraph of Ford’s objection filed in the bankruptcy record Tuesday afternoon:
Without evidence or any support, Debtors insinuate that its difficulties (an undefined “cash hole”) have been ”created by Ford sweeping Debtors’ cash.” This could not be farther from the truth. The Debtors created their own financial mess by: 1) selling vehicles without paying Ford Credit the amounts advanced for those vehicles (referred to as “Sales out of Trust” or SOT”); 2) double flooring vehicles – a process whereby Debtors fraudulently floored vehicles with Ford Credit and floored those same vehicles with other financing sources; 3) flooring vehicles that may never have existed or were not owned by the Debtors; and 4) submitting electronic payments drawn on accounts with insufficient funds. Ford Credit agrees that the Debtors’ records are completely unreliable. Not only that, post-petition, Debtors are not selling vehicles, are unable to match vehicle inventory to specific dealerships, are unable to match keys and titles to its vehicle inventory, and are unable to fulfill its obligations to customers such as registering vehicles after a sale. In addition to being incapable of fulfilling its obligations as Debtors-in-Possession, Debtors have not presented any information about the cost associated with employing a Chief Restructuring Officer or how Debtors intend to pay for a Chief Restructuring Officer.
CLICK HERE to read Ford’s objection.
A bankruptcy court hearing was scheduled for August 16 to address several issues including Ford’s motion to appoint a trustee.