It’s fair to say that Tate’s Auto Group in Show Low, AZ, is finished.
The legal jeopardy entangling the four companies the public has come to know as the Tate dealerships has now ensnared Linda Tate and her son, Richard Berry and his wife, Amy, as individuals.
In March 2019, Tate Ford-Lincoln Mercury, Inc., Tate’s Auto Center of Gallup, Inc., Tate’s Automotive, Inc. and Tate’s Auto Center of Winslow, Inc. filed for bankruptcy protection seeking to reorganize its debts in a combined Chapter 11 proceeding in Tucson, AZ, Bankruptcy Court. The filing came just weeks after the companies and others were sued in the Navajo County Superior Court by Ford Motor Credit Company, LLC, for about $22 million.
The Ford suit was the latest in a series of Tate’s legal troubles — a total of three lawsuits.
The Federal Trade Commission in July 2018, sued the companies and Berry alleging they had, since at least 2014, falsified financing applications submitted by customers, falsified down payment information and “disseminated deceptive advertisements,” according to the FTC complaint.
The bankruptcy case stopped, or “stayed” all the lawsuits — the idea is to allow a struggling enterprise to reorganize its affairs and become profitable again. Berry was in charge of the companies through the reorganization.
But the reorganization never happened. In July, Bankruptcy Judge Brenda Whinery converted the cases from a re-organization to a liquidation noting the lack of transparency, the failure to file required monthly reports with the court, and the lack of “leadership at the helm” of the reorganization. The final report of the Chapter 11 trustee says that the companies’ “balances turned over to the Trustee” was around $891,000.
From that, accountants, appraisers, the debtors’ lawyers, the trustee and his lawyers, and other administrative expenses will be paid first; if there is anything left it will go to various classes of creditors in an order set by law.