Bankruptcy casts doubt on Wyly’s Aspen literary ties
October 28, 2014
At the heart of Samuel Wyly's bankruptcy is the part-time Woody Creek resident's legal dispute with the Securities and Exchange Commission, but Aspen's literary scene faces potential impacts from the filing.
The Dallas entrepreneur's $600,000 grant commitment to the Aspen Institute is listed as one of his 20 largest unsecured claims, his bankruptcy petition shows. Those funds are vital to the operations of the Aspen Writers' Foundation, which is a program of the Aspen Institute.
"This Wyly gift is for the Aspen Writers' program, and it's extremely important to our overall program," Institute Executive Vice President Amy Margerum Berg said Monday. "We are confident they will be able to fulfill this generous and appreciated pledge to us."
Margerum Berg said she would meet with attorneys today to get a better grasp of the potential impacts of Wyly's bankruptcy on the Writers' Foundation, which produces events such as Winter Words, Summer Words, Story Swap and others.
The Writers' Foundation was once an independent nonprofit before the Institute absorbed it in 2009.
"It's important to our programming, and we're very appreciative that it has allowed the Aspen Writers' Foundation to be a part of the Aspen Institute," Margerum Berg said.
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Wyly's bankruptcy came on Oct. 19, after a New York judge ruled in September that he and his brother Charles' estate must pay up to $400 million to the SEC for hiding stock holdings in offshore accounts. Sam Wyly's bankruptcy says he owes $198 million to the SEC. Caroline Wyly, the widow of Charles, 77, who died from an August 2011 car crash near Aspen-Pitkin County Airport, also filed for bankruptcy Thursday. Her husband's probate estate is on the hook for $101 million to the SEC, the bankruptcy says.
While the SEC has attempted to freeze the Wylys' assets to collect the disputed debts, Sam Wyly's attorneys contend that the "Chapter 11 process will be far fairer, more efficient and more effective for all creditors," and that Wyly has "multiple other creditors and claims that need and deserve fair treatment."
Wyly's lawyers also argue that "his non-SEC creditors face a serious detriment" should the SEC attempt to freeze his assets in an attempt to collect the judgment.
Also noted in the bankruptcy filing is Wyly's connection to Explore Booksellers, located on Main Street in Aspen. Wyly bought it for $4.4 million in 2007; it's currently listed for sale with an asking price of $6.5 million.
On Oct. 21, two days after Wyly, 80, sought Chapter 11 protection in Dallas, his attorneys filed a budget with the court to show what type of cash Wyly would need to have in order to fund his living and business expenses.
Among Wyly's monthly expenses are $29,000 for the mortgage on Explore Booksellers, which Wyly's wife operates, the bankruptcy petition says.
The SEC responded to the court filing, arguing that the expenses in Wyly's proposed budget "are exorbitant and unjustified" and "his monthly household expenses alone would boggle the average homeowner — over $13,500, including such extravagances as $2,000 in pool home maintenance and landscaping; and $2,000 in groceries . … Finally, he is paying non debtor expenses from the bankruptcy estate, such as over $29,000 a month for the mortgage on his wife's bookstore and nearly $7,000 a month to support family and friends. The budget is simply too fat to approve," the SEC said.
Wyly, a published author, also reported paying $32,000 a month to two personal writing assistants and $7,000 a month to support family and friends.
Wyly's attorneys, however, noted his promotion of literacy, both in Aspen and elsewhere.
"In addition to writing and publishing, the Debtor is the owner of one of America's great independent book stores, Explore Booksellers in Aspen, Colorado; he purchased the building in 2008 (actually 2007) in order to save it from demolition and development into condominiums, and he leases it to an entity that is owned by his wife and that conducts the book-selling business. Sam has promoted literacy and books for many years, including as a member of the Aspen Writers' Foundation, the Texas Historical Society and other literary and American history causes."
When Explore went up for sale during the summer, former Aspen Mayor Bill Stirling, whose wife Kathryn Thalberg opened the store in 1975, formed the Save Explore Committee to support the operations of the store whenever the store changes ownership. For now, Stirling said there's not much that can be done on the Explore front.
"There are a dozen ways to interpret how this can turn out, and you can go nuts trying to speculate with so many moving parts," he said. "We're just trying to keep everybody in place, and that's all we can do right now. We're exploring every avenue we can that has promise for some kind of resolution."
So far, the committee is focused on a crowd-funding effort solely to support the operations of a possible new owner or operator. Stirling said he's received more than 400 responses from "people who have indicated a strong motivation to participate in some kind of way."
But for now, Stirling said he and the group are waiting to see how the bankruptcy plays out.
"We want to see a little light at the end of the tunnel on the purchase side to know what we'll do," he said.