Reagor-Dykes Auto Group is looking to avoid a shutdown by proposing a $14 million restructuring plan that would “yield the highest and best return for all creditors,” including Ford Motor Credit and GM Financial, according to documents filed June 29 in bankruptcy court.
The proposal suggests the dealership chain will be recapitalized by “Plan Sponsors,” one of whom would be Rick Dykes, co-owner of Reagor-Dykes. Fin Ewing, president of Dallas-based Ewing Auto Group, would oversee the restructuring, the proposal indicated. “Plan Sponsors” will own 90% of the reorganized dealership chain, and a creditors trust will own 10%.
The $14 million will be distributed to the creditors and banks that currently have claims against Reagor-Dykes, including captive financiers Ford Motor Credit and GM Financial. The money is to be used for working capital and to pay back debt and attorneys fees.
Ford Credit has been publicly involved in this case since last year and served as the floorplan lender to six of Reagor-Dykes’ 13 locations across Texas. GM Financial was the floorplan lender to one dealership location in Snyder, Texas. Other lenders involved in the proposal include First Capital Bank, First Bank & Trust, AIM Bank and Vista Bank.
Ford Credit will get $2 million in cash plus a $5 million promissory note for its unsecured debt. Ford Credit’s secured claim will be paid in full by the surrender of collateral, the proposal noted. GM Financial will receive $1.5 million in cash for its unsecured debt. However, the payment is contingent upon GM Financial providing floorplan financing for the reorganization. GM Financial’s secured claim will be paid in full by the surrender of collateral.
If approved, the proposal would allow the dealership chain, which filed for Chapter 11 bankruptcy protection in August 2018, to reestablish business. If the plan is not achievable, though, a liquidation alternative would require an orderly wind-down of Reagor-Dykes business operations.
So far, only former Reagor-Dykes Chief Financial Officer Shane Smith has been charged with a crime in the case.