Rick Dykes, a principal of the disgraced Texas dealership group Reagor Dykes, has agreed to a $58.7 million consent judgment in a civil suit Ford Motor Credit Co. filed against Dykes and co-principal Bart Reagor. Judge Sam Cummings of the U.S. District Court for the Northern District of Texas signed the agreement last week.
Ford Credit's lawsuit, initially filed July 31, said it was owed about $112 million because of alleged fraud by Reagor Dykes Auto Group, which sought Chapter 11 bankruptcy protection Aug. 1. With the dealership group entities protected by the bankruptcy process, Ford Credit amended its lawsuit to name principals Dykes and Reagor as defendants. It's not immediately clear if Reagor and Ford Credit are pursuing a settlement.
Tom Kirkendall, an attorney for Dykes, said details of the consent judgment with Ford Credit are confidential, but if Dykes follows terms of the agreement, the $58.7 million will be returned to him. Ford Credit confirmed that there is a confidential agreement but declined to elaborate, including on whether Dykes could get back the money.
Kirkendall said Dykes wants to revive the dealership group, but added that he could give no details on a potential restructuring. "Not at this juncture, because they haven't been finalized," Kirkendall said. He said Dykes is in talks with "a couple of prospective equity investors right now."
Previous efforts to reorganize the dealership group have stalled, with Ford Credit among creditors voicing skepticism that such plans were feasible. In January, Ford Credit was granted relief from having its assets frozen in the bankruptcy process, and has since been taking back its new- and used-vehicle inventory from dealership lots. Other floorplan lenders, including those affiliated with Toyota and General Motors, have also since been granted such relief.
The Chapter 11 case in the U.S. Northern District of Texas, which was ordered into mediation by Judge Robert Jones in February, continues.
In its civil suit, Ford Credit alleged Reagor Dykes was selling vehicles an average of 55 days before telling the lender and repaying floorplan loans. Ford Credit said Reagor Dykes sold more than 1,100 vehicles without repaying $41 million advanced for their acquisition.
