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Thursday, April 11th, 2019

Tim Eyman stuck in Chapter 11 for now as Judge Barreca orders him to file a budget

Disgraced initiative promoter and serial lawbreaker Tim Eyman will remain in Chapter 11 bankruptcy for the time being despite his desire to dismiss the case, United States Bankruptcy Court Judge Marc Barreca has decided.

In a hearing this morning, Barreca heard arguments from Eyman’s attorney Larry Feinstein in favor of dismissing the case and from state attorney Susan Edison in favor of converting the case to a Chapter 7 liquidation bankruptcy.

But instead of granting either motion, Barreca decided to keep Eyman in Chapter 11, ordering him to file monthly expenditure projections for a seven month period no later than Thursday, April 25th, 2019, and then, beginning in May of 2019, file a budget to actuals comparative analysis to accompany his monthly reports.

Judge Barreca's order setting budget and reporting requirements

“You may not have been ever able to be forced into an involuntary bankruptcy… I mean, the path for that is much more difficult and has a number of determinations involved with it,” Judge Barreca noted in remarks from the bench directed to Tim Eyman and his bankruptcy attorneys from Vortman & Feinstein.

“But once you voluntarily filed [for] bankruptcy, the mere fact that the bankruptcy isn’t really doing what you hoped it would do for the debtor isn’t of itself grounds for backing out of it,” the judge explained to Eyman’s camp.

While Barreca denied Eyman the exit from bankruptcy he and his attorneys had sought, Eyman did avoid — for now — the conversion of his case into a Chapter 7, which is commonly known as a liquidation bankruptcy.

“The State has not met its burden of showing that there’s been such excessive mismanagement by the debtor or substantial or continuing loss to the estate that conversion is warranted,” Barreca declared in subsequent comments.

“I will therefore deny the [State’s] motion to convert, but without prejudice to a motion based on debtor’s future conduct in the case.”

“However, to avoid future misuse of funds and to allow the parties to assess the reasonableness of expenditures, I will require the debtor to file monthly budget projections and to report against those projections.”

Barreca went on to explain that Tim Eyman doesn’t have to guess what his income from gifts and donations from his friends might be, but he does need to estimate what his monthly expenses will be as part of that budget. As mentioned, it must cover a period of approximately six months, spanning the latter half of 2019.

Despite denying the State’s motion to convert, Barreca expressed uneasiness with Eyman’s monthly cash burn rate, which was in excess of $14,000 a month between the end of November 2018 and the end of February 2019.

“I am concerned that Mr. Eyman does not understand that his spending habits require restraint during the pendency of the case,” Barreca said.

The judge then offered an aside: “Regardless of how much influence he [Tim] has, if community property — which is property of the estate — is being expended, that would mean that other family members that are spending community property need to exercise restraint during the pendency of the case as well.”

Barreca’s decision means that Eyman’s bankruptcy will continue for the indefinite future. Eyman is currently fighting legal battles on three separate fronts:

  • He is contesting a charge of misdemeanor theft by the City of Lacey after he was caught on video stealing a chair from Office Depot;
  • He is a defendant in multiple actions pending in Thurston County Superior Court due to his campaign finance violations;
  • And his estate is now under the jurisdiction of the United States Bankruptcy Court for Western Washington due to his decision to file for Chapter 11.

To our knowledge, Eyman has not commented on today’s developments in U.S. Bankruptcy Court. He has instead been asking his followers to contact Secretary of State Kim Wyman to complain after Wyman’s office indicated it would not accept signatures for Referendum 80, Eyman’s latest scheme, which is an attempt to void pay increases for Washington’s elected officials approved by a citizens’ commission.

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