Wednesday, June 27, 2001
Washington, DC, bankruptcy court judge Martin Teel yesterday dismissed Liberty Lobby’s latest Chapter 11 filing on the grounds that it was made in bad faith. CEO Willis Carto had submitted this bankruptcy filing shortly after a receiver began seizing Liberty Lobby’s mail to pay off a multi-million dollar debt to Legion for the Survival of Freedom, parent corporation of Institute for Historical Review. Liberty Lobby had filed bankruptcy once before in 1998 under similar circumstances. Liberty Lobby attorney Thomas Stanton indicated that he would lodge an appeal of this ruling.
Friday, June 15, Judge Teel denied Liberty Lobby’s emergency motion to disburse payroll checks to employees. The following Monday, Teel again denied a similar motion by Liberty Lobby. Since then, it is believed that Liberty Lobby employees have been loaned amounts equal to their pay by Carto front-group “Friends of Liberty Lobby,” also known as “Friends of the Constitution.” It is reported that Carto promised Liberty Lobby employees that this arrangement would continue indefinitely, however, reliable sources indicate that the July 2 issue of Carto’s weekly tabloid, The SPOTLIGHT, says that it is ceasing publication. Carto has a history of using loans such as this as leverage against the debtor, even though the money was originally the debtor's.
For failing to make payments on its multi-million dollar debt, and for breaking two signed settlement agreements with LSF/IHR, Liberty Lobby now faces asset seizure by a court-appointed receiver. If Liberty Lobby were to file for Chapter 7 bankruptcy protection, a U.S. trustee would be appointed to run Liberty Lobby, and to investigate all financial transfers and asset distributions from 1997 onward. LSF/IHR has liens on all present and future Liberty Lobby assets, including cash on hand.