TownTalk has been following the Reagor-Dykes Auto story since it broke last week. The auto group had decided to file chapter 11 bankruptcy to protect the business and protect the employees after they served information about being sued by Ford Motor Credit. U.S District Judge Sam Cummings has placed a hold the lawsuit with Ford so that the bankruptcy proceedings can go forward.
Yesterday, August 9th the court has authorized Reagor-Dykes to operate their business with the use of cash collateral. With this authorization, there will be rules that the Judge has set in order for Reagor-Dykes to abide by. This cash collateral system and compromise from the judge has been accepted by Ford Motor Credit and the dealerships cannot go beyond the amount set up in a monthly budget. The judge also ruled the Reagor-Dykes Auto Group employee wages, salaries and related items will be paid.
Here are the set of rules for Reagor-Dykes to abide by. If the auto group neglects any of the rules from this interim order, then Ford Motor Credit will be all0wed to dissolve the cash collateral system.
- On the day of any retail sale or lease of a vehicle, or one business day from Reagor-Dykes Auto Group’s receipt of any of the sale proceeds for any retail sale or lease of a vehicle that has been sold or leased on or before the date of this interim order, Reagor-Dykes Auto Group shall immediately and forthwith remit to Ford Credit by electronic funds transfer all amounts received by Reagor-Dykes Auto Group up to the amount advanced by Ford Credit to Reagor-Dykes Auto Group on the vehicle.
- On the day of any sale or lease vehicle not floored by Ford Credit, Reagor-Dykes Auto Group shall immediately remit to Ford Credit by certified funds or other immediately available funds received by Reagor-Dykes Auto Group in the amount of 80 percent of Reagor-Dykes Auto Group net sale price of the non-floored vehicle after payment of existing liens against such vehicle, taxes, registration and licensing
- Reagor-Dykes Auto Group shall pay Ford Credit the amount of amortized curtailment/principal payments and interest due under the respective loan documents, beginning with the payments due August 2018, and each month thereafter on the dates and according to the terms set forth in the loan documents
- Reagor-Dykes Auto Group shall provide Ford Credit with proof of the payment of any existing liens, department of motor vehicle fees and/or sales or use tax on a weekly basis
- Should Reagor-Dykes Auto Group receive any vehicles as “trade in” for the payment of any vehicle constituting collateral, Reagor-Dykes Auto Group should notify Ford Credit within one business day of receiving the trade-in and shall promptly pay or satisfy any liens or amounts owing against the trade-in vehicle
- Trades or transfers of floored vehicles by Reagor-Dykes Auto Group with any other dealers, wholesale sales, auction sales and fleet sales of greater than two vehicles are prohibited without the prior written consent of Ford Credit
- Vehicles in demonstration status shall be returned to the dealership on or before the close of business August 4, 2018, and shall not be returned to demonstrator status without Ford credit’s prior written consent. Reagor-Dykes Auto Group shall not place any vehicles into use as service or “loaner” vehicles and shall not permit vehicles to be used for overnight test drives without Ford Credit’s prior written consent.
- Reagor-Dykes Auto Group shall replenish the parts inventory so that the value of the parts inventory does not drop below such value as of the petition date
- Reagor-Dykes Auto Group shall pay all sales taxes, licensing and registration fees and other obligations incurred in the ordinary course of business of an automobile dealer including all contractual obligations with customers
- Reagor-Dykes Auto Group shall maintain and ensure Ford Credit’s collateral in amounts and levels consistent with past practice an the requirements of Ford Credit under the terms of the Loan documents
- All terms of the loan documents shall remain in full force effect, except to the extent they are inconsistent with this interim order
TownTalk will keep you updated as this story continues. There will be a bankruptcy hearing on August 16th.