A bankruptcy court ruled Friday afternoon that Reagor Dykes can pay employees. Paychecks would be cut before the end of the day Friday for work that was already done.
As far as what Reagor Dykes companies can do from now on, an agreement and a court order would be entered later into court records.
On Friday morning, Reagor Dykes asked permission of a bankruptcy judge to pay employees, rent, utilities and other such immediate expenses for 30 days. The Lubbock-based company said there would be enough money to pay employees with money left over.
The request was set for an emergency hearing Friday. Reagor Dykes claimed that without permission to pay immediate expenses, the dealerships will be forced to close its doors.
Ford Motor Credit Company filed an objection against Reagor Dykes Friday afternoon in the bankruptcy case.
Ford sued a list of Reagor Dykes companies on Tuesday, claiming a $40 million or more default. Several Reagor Dykes companies then filed for Chapter 11 reorganizational bankruptcy.
Ford’s objection said, “Ford Credit believes there is not equity in the collateral and no ‘equity cushion’ for adequate protection.”
“Ford believes it is substantially unsecured,” the objection said. “Chapter 11 is not a workable option for automotive dealerships.”
“Debtor [Reagor Dykes] is not a viable entity even at this early stage in its Chapter 11 case,” Ford wrote in the objection.
In the lawsuit, Reagor Dykes asked a federal district judge to put Ford’s claims on hold so that the bankruptcy court could take the lead. The federal district judge seemed inclined to agree except that he pointed out not all the Reagor Dykes companies filed for bankruptcy.
In the Friday court hearing, Reagor Dykes’ attorney David Langston said the money that would be used to pay employees (estimated at $468,000 according to information presented in court) is not owed to Ford and not within Ford’s right to demand.
Langston said three Reagor Dykes companies are not part of the Ford lawsuit or the bankruptcy. Langston also said an outside consultant was asked to help figure out if there’s a way to sell dealerships and maintain their full value.
Langston said Reagor Dykes has no objection to bringing in a forensic accountant to analyze what happened. Langston also said demo vehicles held by employees and Texas Tech coaches would be accounted for.
During Friday’s hearing, Ford’s attorney said it was not known yet if the money in question was outside of Ford’s right to demand. Nevertheless, Ford said there would be no objection to using outside money for paying employees. Ford said in the hearing, it simply wants its collateral to get maximum protection.
Ford also asked that a trustee be appointed to oversee Reagor Dykes assets. Reagor Dykes also presented a proposed budget in court which represented significant cuts in normal operating expenses.
Another bankruptcy court hearing was set for August 16.
Click Here to read the Reagor Dykes emergency motion
Click Here to read the objection by Ford