Tim Eyman’s nearly four-year old bankruptcy could soon be over.
A grand settlement backed by the estate’s court-appointed trustee and agreed to by all the parties involved in the right wing activist’s Chapter 7 case has been submitted to Bankruptcy Court Judge Marc Barreca for final approval next month, records recently filed with the court and examined by NPI show.
“To avoid the additional time, costs, and expenses of litigation, the Parties engaged in mediation,” a pleading filed by the trustee’s attorneys explains.
“The Parties now wish to settle all of the remaining claims related to the Adversary Proceeding and certain other issues in the Bankruptcy. […] In the Trustee’s opinion, the relief sought should be granted in its entirety to give effect to the negotiated Settlement, which is in the best interest of creditors.”
Eyman’s bankruptcy began in November 2018 as a maneuver to avoid the State of Washington’s main campaign finance enforcement lawsuit against him. After the state won a comfort order allowing it to proceed in spite of the bankruptcy, Eyman moved to dismiss his Chapter 11 petition. But Judge Barreca said no.
Eyman’s case got converted to a Chapter 7 liquidation bankruptcy last year after Eyman stopped making the monthly payments to the people of the State of Washington that he had agreed to make, putting him in default. NPI broke the story about Eyman’s default here on the Cascadia Advocate.
A trustee was subsequently appointed to oversee Eyman’s estate.
The primary item owned by the estate is a home — or, in legal parlance, real property — in the Harbour Pointe neighborhood of Mukilteo.
Under the terms of the settlement, the brother of Tim Eyman’s former spouse Karen will provide the funds to purchase that family home, liberating it from the defunct Eyman marital community. The arrangement will allow Karen (who is now going by her previous surname of Williams, according to the proposed settlement) to remain in the home and become its sole owner.
The agreement stipulates that the Williams family shall pay $906,484 to purchase the house and its fixtures and from the estate, which is now under the supervision of trustee Virginia Burdette. After the sale closes, Burdette will have a significant sum of money available with which to satisfy Eyman’s debts.
The total current value of the home is estimated by Zillow to be $1,524,400.
“The agreed cash payment by Karen Williams to purchase the Mukilteo house represents the most efficient and least costly means to liquidate the property,” Burdette’s attorneys told Judge Barreca. “Though the Mukilteo house is property of the Estate, the Trustee recognizes that if Karen Williams were found to have an separate property interest whatsoever, the Trustee’s ability to promptly market the property for sale to an arms-length buyer could be significantly hampered, and would require additional litigation to sell co-owned property.”
Eyman’s primary creditor is the people of the State of Washington, who he owes millions of dollars to for flagrant and obscene violations of the state’s public disclosure laws. His other creditor is the Klinedinst Law Group, but his current attorneys at Goodstein Law Group (in state court) and Vortman & Feinstein (in federal court) also want to be paid for their services. Those firms are participating in the settlement and its approval would bring the proceeding to a close.
The proposed order submitted to Barreca is described as “an order approving settlement of adversary proceeding, allowing abandonment of certain property, and authorizing sale of real property free and clear of liens and other interests.”
The property to be abandoned consists principally of two cars, home furnishings, and jewelry. These are things that Tim Eyman and Karen Williams used to co-own through their marriage, but which would be beneficial for the family to keep and wouldn’t generate a lot of money for the estate if they were to be sold. Accordingly, the trustee is asking Judge Barreca to permit their abandonment.
Barreca will consider Trustee Burdette’s motion in about one month’s time, at a hearing scheduled for August 10th via Zoom. Burdette is represented by Schweet Linde & Coulson, PLLC, while the State is represented by Attorney General Bob Ferguson’s office. Karen Williams is represented by Marc Stern and Tim Eyman is represented (in the bankruptcy proceeding) by Vortman & Feinstein.
As longtime readers may recall, Eyman has used his family’s Mukilteo home in the past as collateral for loans from U.S. Bank to finance initiative signature drives.
Those days are over.
Karen Williams has stated in court that she was unaware of this arrangement, even though it was publicly known due to Eyman’s announcement of it through his email list. With the home now passing into Karen Williams’ sole ownership, it won’t be available to Eyman as a tool with which to finance more destructive schemes that would defund Washingtonians’ essential public services.
That’s a good outcome for the Williams family and for Washingtonians.
Karen Williams has also told the federal bankruptcy court in a past filing that her divorce with Tim Eyman got stalled out due to Eyman’s procrastination. Snohomish County Superior Court records confirm this. They show that Eyman initiated a divorce proceeding in May of 2019. A second case was filed by Karen Williams in March of 2022, with Eyman as the respondent. That divorce case has proceeded along a parallel track as this bankruptcy settlement negotiation.
In a recent email missive, Eyman characterized Attorney General Bob Ferguson’s efforts to hold him accountable for his lawbreaking as having resulted in the loss of his home. But as Eyman knows full well, this proposed settlement will allow his ex, Karen Williams, to remain in the home and to own it free and clear.
The family is thus not losing the family home as Eyman’s missive implied in a ploy for sympathy. The only thing being lost here is Eyman’s ownership interest in the home, which he himself put in jeopardy himself as a consequence of the bad choices that he repeatedly made. Eyman has not been a resident of the Mukilteo home in some time. By his own admission, he moved out years ago and now lives in Bellevue Towers, in a condo that is also owned by the Williams family.
The settlement is now in the hands of Judge Barreca and we’ll see next month what he decides. Our guess is that he’ll approve it. It seems to be a well negotiated, well constructed settlement that is fair and equitable.