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Tuesday, October 30, 2018

TEAM5 TCAPS: Checks...With No Balances? Chapter 7 Bankruptcy May Blemish “Fiscal Responsibility” Claim


November 1 Update: Hypocrisy is not a good quality for a candidate for a school board seat, especially when touting “openness and transparency” as an important plank in a campaign platform.

On October 30, I published a story on this blog revealing that a member of Team5TCAPS had filed a Chapter 7 bankruptcy petition (along with her husband) on November 25, 2015. 

The candidate was not named.

Because Team5 has based so much of its campaign on concern over the district’s finances and recommendations for the best ways for the district to spend funds, one member’s recent (and apparently undisclosed) financial problems take on an even greater relevance.

However, I have subsequently learned the candidate who'd filed for bankruptcy has ongoing difficulty with debt: just 6 days after filing her Statement of Organization with the Michigan Department of State Bureau of Elections on July 24, 2018, the candidate in question, along with her husband, was sued in Grand Traverse County's 86th District Court for non-payment of a $6,000 delinquent debt owed to a local Traverse City performing arts academy.

That case, filed on July 30, 2018, was later dismissed on September 24, 2018 after a memorandum of understanding resolved the outstanding obligation: court records revealed the plaintiff agreed to dismiss the case if the $6,000 debt was paid in full by the defendants before a hearing originally set for September 26, 2018.

In my opinion, this lack of due diligence/disclosure illustrates the current problems with the factionalized nature of the board and the district. 

It appears that within the institutional culture of those involved in the upcoming TCAPS board election, decisions about whom to support are made based on personal relationships / personal loyalty / personal benefit. 

They are not made, as they should be, based on the answers to questions like these: 

Who is qualified and what are their qualifications? 

Who, given their personal history, their educational and work experience and their local relationships, is capable of behaving with thorough-going professionalism and impartiality? 

Which will contribute most to breaking up the factionalism and creating a working group that can begin to address the district's problems? 

That's why this is an important issue.

On its campaign website, Team5TCAPS pledges “responsible management of taxpayer dollars.”

But at least one member of the group, running on a platform of responsible spending, has recently filed for Chapter 7 bankruptcy.

On their November 25, 2015 filing, the candidate and her husband listed assets of $364,754.35 and liabilities of $399,114.25 (primarily personal credit card debt), records with the U. S. Bankruptcy Court of Western Michigan show.

A Chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. 

Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. 

Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. 

In addition, the Bankruptcy Code will allow the debtor to keep certain “exempt” property; but a trustee will liquidate the debtor's remaining assets. 

In this case, however, there was no property available for distribution from the estate over and above that exempted by law.

According to a February 9, 2016 Trustee's Report filed in the case, the Trustee reported she had “neither received any property nor paid any money on account of this estate; that I have made a diligent inquiry into the financial affairs of the debtor(s) and the location of the property belonging to the estate; and that there is no property available for distribution from the estate over and above that exempted by law.”

Court documents reveal that debt totaling $399,114.25 was scheduled to be discharged without payment.  

The official Order Of Discharge was filed on October 18, 2016.