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Case 18-50214-rlj11 Doc 779 Filed 01/03/19 Entered 01/03/19 16:23:24 Page 1 of 6

IN THE UNITED STATES BANKRUPTCY COURT


FOR THE NORTHERN DISTRICT OF TEXAS
LUBBOCK DIVISION

IN RE: §
§ CASE NO. 18-50214-RLJ-11
REAGOR-DYKES MOTORS, LP et al. §
§ CHAPTER 11
§
DEBTORS §
§

MUSA AUTO FINANCE, LLC AND MUSA AUTO LEASING’S MOTION FOR ORDER
DIRECTING DEBTORS AND THEIR COUNSEL TO PROVIDE INFORMATION

TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE:

NOW COMES MUSA Auto Finance, LLC, and MUSA Auto Leasing (hereinafter,

collectively “MUSA”), and files this their Motion for Order Directing Debtors and Their Counsel

to Provide Information and in support thereof, states as follows:

I.
Overview

1. As detailed in various pleadings previously filed by MUSA, MUSA, despite

multiple requests, has been unable to obtain information that is necessary in order for MUSA to

assess its rights and obligations in the above referenced matter with respect to the various Reagor-

Dykes Debtor entities (“Debtors”). MUSA has made multiple attempts to obtain this information

to no avail including as recently as today prior to the filing of this Motion. Moreover, MUSA

sought to avoid preparing, filing, and setting this Motion for hearing for the efficiency of all parties

by filing MUSA’s Joinder in Motion for Order Directing Debtors and Their Counsel to Provide

Information [Dkt. 753] on December 28, 2018; however, Debtors’ counsel has advised that the

hearing on such Motion will likely be continued to another date necessitating the filing of this

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AND THEIR COUNSEL TO PROVIDE INFORMATION PAGE 1
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Motion to pursue enforcement of MUSA’s rights independent of other parties. Therefore, MUSA

files this Motion to obtain the information related to the Debtors’ motor vehicle sales, inventory,

trade-ins, and other similar information so that MUSA may assess and protects its interests.

II.
Factual Background

2. On or about July 31, 2018, several Reagor-Dykes Entities consisting of the entities

that were initially joined in the jointly administered Case No. 18-50214 (“Main Case”) filed

voluntary petitions for relief. Subsequently on November 2, 2018 Reagor Auto Mall, LTD

(“RAM”) commenced a separate case by filing a petition in bankruptcy Case No. 18-50324. The

RAM Bankruptcy case was subsequently consolidated with the Main Case and is now being jointly

administered with all other Debtors.

3. Prior to the petition date on or about April 1, 2017, MUSA entered into Dealer

Agreements with RAM and several other Reagor-Dykes entities under which MUSA agreed to

acquire certain motor vehicle leases and retail installment contracts, in its sole discretion, subject to

the terms and conditions detailed therein (“Dealer Agreements”). Pursuant to the MUSA Dealer

Agreements, MUSA acquired by purchase several lease Agreements from the various Debtors

(“MUSA Leases”). Specifically, prior to the bankruptcy filing in the Main Case, MUSA acquired

seventeen (17) motor vehicle leases including five (5) from the original Main Case debtors and

twelve (12) from RAM upon which the Debtors failed to perform several of their obligations

(“MUSA Leases”).

4. Unfortunately, despite multiple requests, MUSA has been unable to obtain access to

Debtors’ dealership records or files (deal jackets), inventory lists, or other similar information so

that it can assess and determine the location of certain trade-in vehicles in which it maintains a

priority perfected or other equitable interest. Such interests may arise from MUSA’s perfected

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security interest on the certificate of title remaining as a result of an unpaid trade-in from a former

MUSA borrower or as a result of a trade-in on a MUSA Lease for which MUSA advanced funds,

but for which Debtor failed to pay off the trade-in vehicle’s lender (collectively, the “MUSA

Vehicles”).

5. Although certain of the foregoing MUSA Vehicles are known to MUSA by vehicle

identification number, there are other vehicles that may be in the possession of RAM for which

MUSA does not possess the requisite information to assess its lien priority or to otherwise locate

the vehicle or the status of its certificate of title. Moreover, MUSA has been unable to locate

several of the certificates of title related to the MUSA Leases or MUSA Vehicles so that it can

perfect its interest therein and Debtor has failed (or refused) to obtain, consolidate, and/or share

information related to the location of the same so that MUSA, and other similarly situated retail

lenders, can adequately protect their interests, and the interest of their consumer borrowers. Many

of the MUSA Leases were originated by RAM; however, documents that are available to MUSA

indicate that other Reagor-Dykes Debtors may have been involved in such transactions such that

MUSA cannot ascertain to which of the various Reagor-Dykes debtors it should focus its efforts.

This uncertainty has complicated MUSA’s remedial efforts and is unnecessarily increasing the

costs for all parties involved.

6. Since August 2018, MUSA (as well as multiple other retail lenders) has made

repeated requests for access to the information referenced above from Debtors’ counsel, the Chief

Restructuring Officer for several of the Debtors, and other representatives of Debtors. These

requests have been made on no less than ten occasions in various forms both verbally during phone

calls; via email; and before, during and after hearings in this matter. To date, no detailed

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information that is needed to assist MUSA in resolving the various consumer issues and other

disputed creditors’ claims has been provided by Debtors, the CRO, or the Debtors’ attorneys.

III.
Argument

7. Section 1107 of the Bankruptcy Code places the debtor in possession in the position

of a fiduciary, with the rights and powers of a Chapter 11 trustee, and it requires the debtor to

perform all but the investigative functions and duties of a trustee. Following the 1107 trail, the

Debtor in possession must among other things, “furnish such information concerning the estate and

its administration as is requested by a party in interest.” 11 U.S.C. §704(a)(7). In assessing what

fiduciary obligations are owed to secured creditors, unsecured creditors, and debtors, some courts

build upon the general principle that the trustee’s fiduciary duty of loyalty flows to all creditors.

8. The debtor has the same responsibilities and powers as a chapter 11 trustee.

Therefore, the debtor, by its management, has a fiduciary duty to the creditors, employees,

shareholders, company and court. This fiduciary duty extends to all of the debtors’ controlling

management, shareholders, officers and directors. Although a difficult concept to implement

practically, the debtor has a legal responsibility to act in the best interests of its creditors, and not in

its own best interest. The debtor is obligated to be cooperative and honest in its disclosure of the

company’s condition and cooperate with creditors.

9. MUSA is entitled to obtain the information about the vehicles and the relevant

paperwork related thereto so it can determine how to proceed in this case. The Court is requested to

grant this Motion and require the Debtors to disclose the information to MUSA within a reasonable

time not to exceed 20 days unless the parties agree otherwise. MUSA further requests any equitable

relief under 11 U.S.C. §105(a) so that it can obtain the information requested.

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III.
Requested Relief

WHEREFORE, MUSA request that the Court grant the Motion and require the Debtors

to disclose the requested information within a reasonable time to MUSA. MUSA also requests

such other relief in law or in equity to which it may justly be entitled.

Respectfully submitted,

PADFIELD & STOUT, L.L.P.


421 W. Third Street, Suite 910
Fort Worth, Texas 76102
(817) 338-1616 phone
(817) 338-1610 fax

/s/ Alan B. Padfield____________


Alan B. Padfield
State Bar I.D. #00784712
abp@padfieldstout.com
Jeffrey V. Leaverton
State Bar I.D. #24078840
jleaverton@padfieldstout.com

Attorneys for MUSA

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CERTIFICATE OF SERVICE

The undersigned converted the foregoing document into an electronic image, via portable
document format (.pdf), electronically submitted same to the Internet web portal for the Clerk of
this Court utilizing the Electronic Management and Electronic Case Filing system of the Court,
which has caused service, via Simple Mail Transfer Protocol (e-mail), of a Notice of Electronic
Filing of this imaged document to all parties receiving EM/ECF service on Thursday, January 3,
2019.

/s/ Alan B. Padfield

CERTIFICATE OF CONFERENCE

The undersigned has conferred via telephone and email with counsel for Debtor on multiple
occasions regarding the merits of this Motion including as recently as January 3, 2019. Debtors
have indicated they are opposed to the relief sought herein.

/s/ Alan B. Padfield

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