Court docs detail allegations against Kelly Grimsley Auto, judge grants TRO

Yahoo

20-05-2025

ODESSA, Texas (KMID/KPEJ)- A federal judge has granted a temporary restraining order against Kelly Grimsley Auto Group as part of a lawsuit brought by Hyundai Capital America against the beleaguered auto dealer, which has been under fire from customers who have reported numerous, and possibly illegal, issues with the car buying process; now, the auto group is facing the heat in federal court.
Court documents showed that last week, United States District Judge David Counts signed an order with prevents the auto dealer from selling or trading vehicle inventory, and forbids the company from tampering with records, withdrawing more than $5,000 from company accounts, selling off real estate assets, taking new loans, or funneling money to the Grimsley family.
PREVIOUS COVERAGE: Kelly Grimsley Auto under fire, here's what you need to know if you made a purchase
The group can conduct routine business, but only with written permission from Hyundai and any violation of the order could result in further charges.
Hyundai finances Kelly Grimsley's vehicle inventory through a series of advances described in their Inventory Loan and Security Agreement, which is in turn secured by both K. Grimsley, L.L.C. and Kelly J. Grimsley through separate contemporaneous guaranty agreements. Through these Loan Documents, Hyundai is guaranteed full and prompt payment when due, by acceleration or otherwise. The ILSA itself grants Hyundai a security interest in Kelly Grimsley Auto Group's collateral, which includes, 'all inventory, including new and used motor vehicles.'
Through its lawsuit, Hyundai presented evidence that Kelly Grimsley Auto Group has defaulted under the ILSA.
Attorneys for the finance company said Hyundai initially grew concerned after receiving a notice of nonsufficient funds for Kelly Grimsley Auto Group payments. It quickly notified the Kelly Grimsley Auto Group entities of default only to receive another notice of nonsufficient funds. Hyundai then performed lot audits of Kelly Grimsley Auto Group vehicle inventory and reviewed sales reports.
Hyundai's evidence shows that four hundred and five vehicles subject to these Loan Documents bear unpaid, due, and outstanding balances, totaling $13,663,534.42.
This prompted Hyundai to act, and the company sent a notice of acceleration for $14,998,033.07, exercising its right of acceleration under the ILSA. Most recently, Hyundai provided a voluntary surrender agreement to Kelly Grimsley Auto Group seeking control of the remaining vehicles. So far, Kelly Grimsley Auto Group has failed to turn the remaining vehicles over.
Hyundai has also presented evidence of other concerning instances of default. Specifically, according to court documents, the evidence shows that Kelly Grimsley Auto Group has failed to make payments on one or more merchant cash advance agreements for amounts greater than $50,000. Additionally, issues with retail financing for Kelly Grimsley Auto Group's customers have caused difficulties for customers in obtaining license plates and titles— some customers have left Google reviews showing that this issue stretches back at least ten months.
'The evidence also shows that Kelly Grimsley Auto Group has defaulted on the dealership's mortgage. In addition to amounting to events of default under the ILSA, Hyundai has determined that these acts also constitute a material adverse change, as defined in the ILSA. Hyundai has accordingly shown a substantial threat that Kelly Grimsley Auto Group will continue to sell inventory without paying back its advances under the ILSA,' the lawsuit said.
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