Money for victims in the Reagor Dykes bankruptcy case is all gone – although they fared better than most creditors in bankruptcy cases.
Trustee Dennis Faulkner – in charge of recovering money in the case – terminated the creditor’s trust, announcing Friday no more money will be distributed, according to court records obtained by LubbockLights.com
The trust’s bank accounts were drained to zero and closed.
The Lubbock-based auto dealership group filed for bankruptcy in August 2018 after Ford Motor Credit sued it for fraud. Two years later, Faulkner was appointed as trustee to oversee a Chapter 11 (reorganization) plan, which later became a liquidation plan.
Final recovery for general unsecured claims was 71 percent. And for automotive consumers, it was 72 percent, Faulker’s notice said.
For comparison, in the 2009 General Motors bankruptcy, unsecured creditors initially recovered 10 percent in the form of equity in the restructured company and then roughly doubled their recovery in later settlements.
Previous coverage: Reagor Dykes update: Bankruptcy briefly reopened Thursday, details revealed on how much money was recovered
How consumers got stuck in the middle
Hundreds of customers who bought cars from Reagor Dykes could not transfer their titles, because taxes were not paid by the dealership, or trade-in payments were not completed after the bankruptcy started and the Reagor Dykes bank accounts were froze.
People ended up having to make payments on both the new cars and the cars they traded in (and no longer had).
How much money
In the Reagor Dykes case, people or companies could make claims in a registry. They listed more than $187 million.
“There were $1.2 billion of total claims in dollar amount filed in this case,” Faulker told judge Robert L. Jones in August 2023.
Some of these were duplicate claims, and others were outright rejected during the process.
A quarterly report in August 2023, only 2 percent of the unsecured claims were paid at that time.
Faulkner recovered money by filing “claims and causes of action” against Ford Motor Credit Company, several banks, and a few other companies that did business with Reagor Dykes. In the Ford case, for example, an attorney for Faulkner claimed Ford was profiting from the dealership’s bad behavior.
Faulkner’s claims were settled confidentially out-of-court, so we don’t have the details.
How it happened
Just before the bankruptcy was filed, Ford Motor Credit Company filed a lawsuit against Reagor Dykes claiming it may be the biggest fraud of its kind in U.S. history. The lawsuit said the dealerships manipulated paperwork to make it look like fewer vehicles were sold and therefore less money was owed under Ford’s financing plan.
Reagor Dykes was also double financing – in other words, borrowing money twice for the same vehicle, court records also said.
Local banks also accused the dealership group of a particular kind of bank fraud called check kiting.
Criminal charges were filed. An Amarillo jury found Bart Reagor guilty of making a false statement to a bank and 15 other former employees of the auto group were convicted of federal crimes. Reagor appealed his 14-year sentence, but his appeal was rejected. He’s scheduled to serve his sentence until 2033.
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