The office of United States Trustee filed an objection Monday in the Reagor Dykes bankruptcy cases.
A list of Reagor Dykes (RD) companies filed for Chapter 11 reorganizational bankruptcy on August 1 after Ford Motor Credit Company accused RD of defaulting by $40 million or more. In the time since the bankruptcy was filed, Ford accused RD of fraud.
Last week, RD requested permission from a bankruptcy judge to hire a Chief Restructuring Officer (CRO). The CRO would investigate potential wrongdoing including Bart Reagor and Rick Dykes “in the name of transparency.”
The office of US Trustee said in bankruptcy records Monday, “Neither the engagement letter nor motion describe who the CRO would report to, the CRO’s fiduciary duties, or, if need be, the process by which the CRO could be removed.”
But the lack of detail was only the first objection.
“These are all roles traditionally held by a chapter 11 trustee,” the objection said.
“In contrast, a chapter 11 trustee has clearly defined powers under the Bankruptcy Code to hire professionals and pursue such causes of action,” the objection also said.
A trustee has not yet been approved to oversee the RD bankruptcy, but Ford made the request.
The office of United States Trustee wrote, “Given the pending motion to appoint a trustee, it appears the better course of action would be to deny the request for a CRO, and have the court direct the appointment of a trustee to manage this case.”
A bankruptcy court hearing was scheduled for several items on August 16.