ATLANTA — Republican gubernatorial candidate Nathan Deal faced more questions about his finances Wednesday, after a federal judge reopened the bankruptcy case of his daughter and son-in-law a month before the November general election.
The lawyer who handled the bankruptcy case for the U.S. government told The Associated Press that the former north Georgia congressman should have been listed as a co-debtor in the filing for the couple’s failed sporting goods business.
Deal, who reported in a 2006 congressional disclosure form that he was a partner in the business with a 50 percent stake, was not mentioned at all in the bankruptcy filing.
On Wednesday, Deal said the bankruptcy judge’s decision to re-examine the case will not affect his campaign for governor. Deal also chastised the media for subjecting his family to such scrutiny.
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“I am not going to get into their personal bankruptcy,” Deal said after a candidate forum in Atlanta on Wednesday. “I don’t think that’s appropriate for you to do so. For you to drag my family members into this kind of campaign is totally inappropriate.”
But his Democratic opponent, Roy Barnes, said Wednesday that Deal’s financial situation suggests he is not ready to take on the state’s budget woes.
“If you had a business, who would you want running it right now? Me or Congressman Deal?” Barnes asked. “I’m glad he helped his daughter. But this is not an issue about helping your daughter. This is an issue about disclosure. This is about management. Why was this not disclosed?”
Deal’s daughter and son-in-law, Carrie and Clint Wilder, filed for bankruptcy in 2009 after their Habersham County store failed, leaving Deal and his wife, Sandra, on the hook for a $2.3 million loan they guaranteed for the venture.
There was no mention of Deal as either a partner or a guarantor of any business loan in the court filing. The Wilders listed themselves as 100 percent owners in the company and checked “none” for co-debtors.
The lawyer who handled liquidation of the Wilders’ assets on behalf of the government said Deal — as a guarantor for the loans — should have been listed in the filing.
“Mr. Deal was co-debtor on some of the obligations that the Wilders owned,” said Atlanta lawyer Paul Rogers, who was appointed by the U.S. Trustee to liquidate the Wilders’ assets.
As a co-debtor, Deal “could very well be liable for additional debts of the company,” Rogers said, adding that he could not say so with certainty without reviewing additional corporation and loan documents. Deal said Wednesday that he was merely an investor in Wilder Outdoors and had no additional liability for the business. He said the only way he would have needed to appear on the bankruptcy documents was as a creditor owed money who intended to make a claim against his daughter and son-in-law.
“And certainly I didn’t intend to do that. I was an investor,” he said. “I was a stockholder.”
Deal initially referred questions to his Tifton-based campaign accountant, Jimmy Allen, who said last week that Deal should have been in the bankruptcy filing. Reached Wednesday afternoon, Allen said he wasn’t so sure.
“I’m not a bankruptcy expert,” Allen said, adding that his comments last week were speculative.
Deal has been facing a barrage of questions about his financial affairs, including that he is so in debt that he is selling his home and that he initially failed to disclose millions of dollars in business loans on a state form.
His finances have been under intense scrutiny since details of the outstanding $2.3 million loan surfaced. Allen has said Deal has more than enough assets to make good on the debt without filing for bankruptcy and is liquidating his IRA to help pay the debt.
Deal has also maintained he will meet his obligations.
Two bankruptcy experts told The AP it appears Deal should have been listed on the Wilders’ bankruptcy documents as a debtor. And, they say, the trustees’ reopening of the bankruptcy could lead to examination of Deal’s absence on the form. Jack Williams, a bankruptcy professor at the Georgia State University College of Law, said the trustee’s contention that Deal is a co-debtor is significant.
“The trustee has an independent duty to investigate these issues, and as a matter of practice, bankruptcy courts tend to give trustees deference,” Williams said.
Leon Jones, a bankruptcy expert with Atlanta-based Jones & Walden, said he had little doubt that Deal should have been listed as a co-debtor.
“(T)here’s no wiggle room — Deal should have been listed as co-debtor. You have to show that he owes (the bank) the money. That’s cut and dried and they didn’t do it,” he said. “But sometimes innocent omissions happen.”
U.S. Bankruptcy Judge Robert E. Brizendine ordered the case reopened Monday after it was revealed that Clint Wilder had a previous bankruptcy in 2001. Bankruptcy laws bar anyone from filing for protection more than once within eight years, and the previous filing appears to make him ineligible to have the new debt discharged.
Brizendine was acting on an order from U.S. Trustee Donald Walton. A spokeswoman for the office of the U.S. Trustee declined to comment.
The Wilders’ attorney, Harmon T. Smith Jr., said Clint Wilder revealed his previous bankruptcy during the hearing into the bankruptcy — but mistakenly said it occurred in 1991 instead of 2001.
“It was a miscalculation,” Smith said. “It’s not as sinister as people want to make it.”