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Bankruptcy Issues Could Decide Georgia Governor Race

By Jonathan Ginsberg, Atlanta Bankruptcy Attorney

Two bankruptcy related issues are impacting Georgia’s gubernatorial race and could be the deciding factor in a close race this November.   Republican candidate Nathan Deal is facing increasing scrutiny about both his personal finances as well as two Chapter 7 cases filed by his daughter and son-in-law.

The financial issues confronting Mr. Deal arose in 2005, when the candidate agreed to guarantee bank loans totaling over $2 million to help his daughter and son-in-law finance an upscale sporting goods store in north Georgia.   Unfortunately for Mr. Deal and his family, the business failed and the loans are now in default.  According to the Atlanta Constitution, a $2.3 million business loan owed to a South Carolina Bank called SCBT and backed by the FDIC as a successor in interest to a failed Georgia bank called Community Bank comes due in February, 2011, approximately one month after Mr. Deal would be sworn in as governor if he wins the election.

Mr. Deal insists that he will not file for bankruptcy but it is difficult to see how he will be able to pay back or restructure this defaulted loan.  His primary residence and other business property is currently listed for sale but the proceeds will not be enough to cover the entire loan.

Mr. Deal asserts that his financial woes arise from his desire to help his daughter and son-in-law, and like many of his fellow Georgians, the downturn in the economic climate caused the business to fail.

Candidate Deal’s high profile financial woes have also brought an additional spotlight on his daughter and son-in-law.  According to the clerk’s docket in the Northern District of Georgia, Mr. Deal’s son-in-law, Clint Wilder, filed an individual Chapter 7 case in November, 2001.  Mr. Wilder and his wife, Carrie Deal Wilder, filed a joint Chapter 7 in July, 2009.   This 2009 filing did not reveal the 2001 filing as it should have.  The Bankruptcy Code requires debtors to wait 8 years from the date of filing of a Chapter 7 case before they can file another Chapter 7 – in this case, the 2nd Chapter 7 was filed about 7 1/2 years before the 1st filing.

The Chapter 7 trustee in the 2009 filing has advised local newspapers that he has referred this matter to the United States trustee for investigation.  It is very likely that the 2009 discharge for Mr. & Mrs. Wilder may be revoked.

Whether Mr. Deal’s personal financial issues, or his daughter and son-in-law’s bankruptcy issues will affect the 2010 election remains to be seen.

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Full post as published by Bankruptcy Law Network on September 19, 2010 (boomark / email).