Ford Motor Credit has been sued for $25 million by the International Bank of Commerce (IBC) for allegedly failing to notify the bank and other investors that funding was terminated for Reagor-Dykes Auto Group (RDAG) dealerships.
Laredo, Texas-based IBC had loaned and refinanced more than $30 million to Reagor-Dykes from August 2017 to February 2018, the bank noted in the July 12 court filing. Nearly one year ago, Ford Credit “abruptly” stopped funding RDAG on the heels of accusing the Lubbock, Texas-based dealership chain of hiding one of the largest floorplan financing frauds in history, IBC noted in the filing. IBC claims the captive failed to inform “any officer, director, or equity owner of RDAG, or any representative of its creditors of the floorplan fraud.”
As a result of Ford Credit’s actions, IBC and other investors were unable to “attempt to implement a consensual plan to mitigate the damage,” according to the filing. On top of that, IBC claims that Ford Credit had “interfered with IBC’s contractual and/or business relations,” with the dealership chain, which resulted in IBC’s losses.
“The conduct of Ford Credit in administering the floorplan financing was a proximate cause of IBC’s losses,” the bank noted.
IBC argues that Ford Credit’s alleged role in the floorplan fraud scheme resulted in the bank’s damages — claiming Reagor-Dykes former Chief Financial Officer Shane Smith and the captive knew of the July 2018 “surprise” audit from Ford Credit that led to the dealership filing for Chapter 11 bankruptcy. Additionally, “facts reveal that during the floorplan fraud, the clean audits were not truly ‘surprise’ audits. Instead, RDAG would learn in advance the exact date when Ford Credit’s audits were going to take place,” the filing noted.
A hearing date on this case has not been scheduled. The next hearing in the Reagor-Dykes bankruptcy case is scheduled for Oct. 7.