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Attorneys for Reagor-Dykes Auto Group have asked the bankruptcy judge to allow them to hire a Chief Restructuring Officer (CRO) to investigate the actions of the former Chief Financial Officer and anyone who may have been working with that person.
The documents say officials with Reagor-Dykes Auto Group (RDAG) were “taken completely by surprise by the alleged findings” in Ford’s audit in July. Officials with RDAG also say the audit in June not only had a clean bill of health, but were praised on the performance RDAG was experiencing at the dealerships. The July audit, according to Ford Motor Credit, said RDAG was failing to meet certain standards under their floor financing requirements and were in default of more than $41 million. Because of the default, Ford stopped all funding on their loans. RDAG officials say this is what caused them to file for Chapter 11 bankruptcy.
According to RDAG’s court documents, the internal investigation showed “concerning activities” of the former CFO and perhaps others who were working with that person within the RDAG operation. They’re also wanting to investigate the nature of the actions and conduct for the former CFO and perhaps others working in concert that have caused losses to RDAG. They also want to know the size of the loss created by the actions of the former CFO and perhaps those working in concert.
The documents also say because of the departure of the former CFO and the current state of RDAG, the company and owners have determined it necessary to bring on the Chief Restructuring Officer firm. This person will also take on the duties of a Chief Financial Officer.
The filing also requests the CRO investigate the extent to which there has been financial wrongdoing on the part of the former CFO and any other persons within the RDAG organizations, “including without limitation ownership and persons related to ownership. In effect, ownership has determined it necessary that (CRO) investigate ownership, in the name of transparency and as necessary to make certain RDAG fulfill their obligations within the chapter 11 process.”
RDAG also believes the CRO will provide them with “stability, oversight, and operational assistance to determine and resolve the disputes between Ford and RDAG.”
This CRO will be paid hourly and in accordance with the bankruptcy code, rules and any order of the court dealing with the interim compensation procedures.
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