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So much for that bankruptcy: Tim Eyman moves for his Chapter 11 case to be dismissed

Late last year, Tim Eyman sent out an email in which he claimed that Attorney General Bob Ferguson’s efforts to hold him accountable for his repeated violations of Washington’s public disclosure laws had left him with no choice but to file for bankruptcy and divorce from his wife Karen. Said Eyman in that email:

“The amount that the government, the lawyers, and others are going to take from me is the value of all my assets on the day I filed for bankruptcy. That includes our home, cars, furniture, savings, etc. It will be the bankruptcy judge, not the AG, who will decide how much I owe. I’ll then have years under a payment plan to pay that amount using future earnings and/or the sale of assets, like our home. It’s going to be the most difficult financial challenge I’ve ever faced.”

“But again, I have no choice.”

Eyman’s woe-is-me declaration instantly made headlines and prompted many people to conclude that Eyman’s finances were in precarious shape.

But as NPI reported last week here on the Cascadia Advocate, in recent filings with the U.S. Bankruptcy Court for Western Washington, Eyman disclosed having nearly half a million dollars in checking accounts with three different banks, plus additional sums in savings accounts and retirement accounts, personal property valued at over half a million dollars, and a home valued at nearly a million dollars.

Eyman’s Chapter 11 filing is “based on the assumption that Attorney General Bob Ferguson’s office will be successful in winning a very large, $2.1 million judgment against him,” I explained in that post, adding: “That hasn’t happened yet and it can’t happen before January of next year, when the trial in the main State of Washington v. Tim Eyman case will take place. It is possible that Eyman and Ferguson could reach a mutually acceptable settlement agreement beforehand that entails Eyman paying a large penalty, but that seems unlikely.”

On February 28th, less than a week after I wrote those words, Eyman and his attorney Larry Feinstein conceded my point in their Motion to Dismiss:

The Debtor filed these proceedings on November 28, 2018 (Dkt #1). His petition listed two creditors: one was his former attorneys, the other is the State of  Washington. The State has asserted substantial disputed unliquidated claims against the Debtor arising from State of Washington v. Tim Eyman, et al. (Thurston County Superior Court case no. 17-2-01546-34) and State v. Tougher to Raise Taxes, et al. (Thurston County Superior Court case no. 16-2-03891-34).

Those cases are still pending.

After notice and hearing, the Court entered a Comfort Order on Exemption from Automatic Stay on January 8, 2019 (Dkt. #38).

They are proceeding according to their trial schedule. Those cases will not be brought to trial no earlier than 2020 and maybe well after that, as there are pending motions to amend the complaint(s) which will push trial even further into the future.

After due consideration, and because the amount and nature of any claims that might be asserted are years out, the Debtor wishes for his bankruptcy to be dismissed at this time.

Until such time as the disputed unliquidated claims are reduced to judgment, if any, the benefits of maintaining the expense of a Chapter 11 proceeding are outweighed by practical realities. The Debtor would not be able to propose a feasible plan until the total amount owed to the State of Washington is determined and liquidated.

If either party appeals a decision, it will be many years down the road before a final allowed claim could be dealt with and structured in a bankruptcy proceeding.

Emphasis is mine.

Tim Eyman's motion to dismiss bankruptcy filing

Eyman’s Motion to Dismiss is a clear admission that this entire proceeding was unnecessary. Tim Eyman is not bankrupt, and he did not need to file for bankruptcy. Yet he did anyway. Why? Well, perhaps Eyman was advised that filing for bankruptcy would be a way to stall Attorney General Ferguson’s lawsuit.

Normally, when a person or entity files for bankruptcy, it generally results in an automatic stay of all civil proceedings against them. And Eyman’s Chapter 11 filing did have the effect of pausing State of Washington v. Tim Eyman… but only for a few weeks. The State promptly asked for and got a Comfort Order from U.S. Bankruptcy Judge Marc Barreca giving it a green light to proceed with its case in Thurston County Superior Court under the the “police and regulatory power” exemption defined in 11 U.S. Code § 362 (Automatic Stay).

With the comfort order in hand in early January, Ferguson’s office was back in business and State of Washington v. Tim Eyman picked up where matters had been left off. But of course the bankruptcy proceedings that Eyman had initiated continued. And as his lawyer told the court, that’s been costing Eyman money:

The current bankruptcy filing has not slowed the legal expenses incurred by the Debtor but has actually increased them with the addition of US Trustee fees and bankruptcy counsel’s fees.

Those fees and expenses would lessen the eventual amounts available for distribution to his creditors.

The Debtor must devote his limited resources to where it will do the most good. It is in the creditors’ best interest for this bankruptcy to be dismissed and the pending litigation resolved.

Limited resources, ha!

No doubt Eyman is anxious to get this proceeding shut down so he doesn’t have to continue filing reports detailing his personal financial position which his opposition gets to examine, along with anyone else who might be interested.

In the meantime, though, Eyman has continued to cite his sham bankruptcy in his fundraising appeals. Emails sent by Eyman since February 28th (when he moved to dismiss his Chapter 11 case) have ended with the following plea:

“I’m still struggling to dig myself out of all the legal expenses, bankruptcy costs, and other crap that the AG’s lawsuit is costing me. If you’re willing to help, there’s three options: 1) Mail check […] 2) PayPal […], 3) GoFundMe.”

If you believe what Tim Eyman says, perhaps you’d like to buy a bridge from me.

Former Eyman attorney Joel Ard claimed in a brief filed with the court that the State of Washington does not object to the termination of the bankruptcy case. However, the State’s response to the Motion to Dismiss has not yet been submitted. It isn’t due until next week. The State did previously submit an objection to Ard’s application for attorney’s fees. Ard requested $56,087.70 despite having backed out of representing Eyman only a short time after taking him on as client.


2 Comments

  1. Ken Rogers
    Posted March 12th, 2019 at 4:07 AM | Permalink

    So the bankruptcy was just… a ploy to get Eyman out of trouble in a campaign finance enforcement action?

  2. Charles Watkins
    Posted March 12th, 2019 at 11:19 AM | Permalink

    The Eyman saga continues. Seems like there’s already enough material for a Lifetime movie…

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