Former location of Reagor Dykes
A bankruptcy judge in Lubbock called recent developments in the Reagor Dykes case “extraordinary” as he briefly reopened the case Thursday afternoon.
The purpose of the hearing was to make a minor adjustment, but it revealed much more in Judge Robert L. Jones’ courtroom – the high percentage creditors have received compared to most bankruptcy cases.
Unsecured creditors in October recovered 60 percent of the money Reagor Dykes owed them. It will go up to 70 percent or more in May.
The Reagor Dykes Auto Group (and related companies) filed for bankruptcy in 2018. According to attorneys in a court hearing, the case racked up $1.2 billion in claims – although not all of them were accepted by the court. A specific set of unsecured creditors filed $20 million in claims.
It was so bad in July 2020 that the bankruptcy itself was insolvent – meaning there was not even enough money to pay for services to process the case.
Compare that to now. During the hearing, Dennis Faulkner, the Liquidating Creditors Trustee, told the judge all administrative claims, tax claims and priority claims were paid in full.
Consumers got back 72 percent – just slightly more than unsecured creditors.
That’s unusual, and not just because it was a large, difficult case. LubbockLights.com found online analysis of debt recovery in bankruptcy.
CRG Financial found 72 percent of bank debt – often backed by collateral – was recovered in the early 2000s. For unsecured bonds, the recovery rate was either 21 or 29 percent depending on the type.
The hearing on Thursday was in reference to only $36,000 of debts. Faulkner was unable to locate some of the creditors by mail, email, phone or an Internet search. He asked the judge for permission to put that money toward the creditors who have been located. The judge agreed.
The bankruptcy trust fund is likely to close within 90 or 180 days. Once that happens, there will be no more payments to anyone.
Briefly recapping the case
Just before the bankruptcy was filed, Ford Motor Credit Company accused Reagor Dykes of committing the biggest fraud of its kind in U.S. history. Local banks also accused the Lubbock-based auto dealership group of fraud.
More specifically, Ford accused Reagor Dykes of forging the paperwork on its financing plan. Reagor Dykes made it look like it did not owe payments on new vehicles – but the money was due.
A jury in Amarillo found Bart Reagor guilty of making a false statement to a bank. He’s serving a 14-year prison sentence. In addition to Reagor, 15 other former employees of the auto group were convicted of federal crimes.
Faulkner was able to scrap together money from out-of-court settlements with Ford and other companies involved with Reagor Dykes. Not all the records are open. For example, the settlement with Ford is confidential.
The bankruptcy was closed in August, but Faulkner continued working in the background to find and repay creditors. The judge reopened it long enough to hear from Faulkner and an attorney. He agreed to then close the case.
Comment, react or share on our Facebook page.
Coming soon, we will offer a weekly newsletter to highlight our work. Use the form below so you don’t miss a thing.
Facebook