Consumer Law

The White House Gatecrashers' Bankruptcies

By Brian Wolfman

By now, you probably know that Tariq and Michaela Salahi snuck in to the state dinner the other night at the White House. But I'd bet that you don't have all the details about their companies' bankruptcies and how those bankruptcies may illustrate an under-the-radar form of congressionally-sanctioned bankruptcy abuse. Adam Levitin over at Credit Slips has this long and interesting report on the topic. Here's a taste:

Some of the news reports on the White House dinner crashers (Tariq and Michaela Salahi) have noted that they own a winery that filed for Chapter 11 (reorganization) bankruptcy and then converted to Chapter 7 (liquidation) bankruptcy. My prurient interest was engaged, so I tracked down the petitions and relevant filings (linked below).  What follows is my attempt to sort out the Salahi family's business doings, as well as some musings about where we should really look for bankruptcy abuse--small business filings where the business is the alter ego of the owner, but where corporate law might not allow veil piercing.  In these cases the sophisticated creditors get personal guarantees, but the tax authorities, tort creditors, and unsophisticated creditors get screwed by the corporate form.

Full post as published by CL&P Blog on November 28, 2009 (boomark / email).