Grand settlement agreed to by the parties in Tim Eyman’s Chapter 7 bankruptcy case

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.