Sunday, March 18, 2001

Creditors question Wilkinson about bankruptcy

        LEXINGTON, Ky. — Former Gov. Wallace G. Wilkinson told creditors he can account “for every penny and every dollar” of the huge amount he borrowed and said they “greatly harmed” his companies by forcing him into Chapter 11 bankruptcy.

        Mr. Wilkinson appeared in U.S. Bankruptcy Court on Friday to answer questions from the creditors, who claim he had not repaid more than $300 million he borrowed to buy books for his college bookstore business.

        The creditors said Mr. Wilkinson had borrowed large amounts to fund Wallace's Bookstores and Wallace's Book Co. but had refused to give them the financial data they needed to determine how the money was being used.

        The two companies followed Mr. Wilkinson into Chapter 11 on Feb. 28 after creditors filed an involuntary Chapter 7 bankruptcy petition Feb. 5 that could have forced the sale of his assets.

        Mr. Wilkinson had vague answers to some questions about his sources of income, and was instructed by his attorneys not to answer a series of pointed questions about what he did with borrowed money.

        Mr. Wilkinson has also filed financial information with the court indicating that he has assets of about $86.8 million, and liabilities of $418.4 million.

        He said he had no specific reason for borrowing the money from his company and that he doesn't believe there is a loan agreement documenting the debt.

        Mr. Wilkinson said Wallace's Bookstores Inc. and its subsidiaries are worth between $50 million and $225 million.

        Before he was forced into bankruptcy the value of Wallace's Bookstores was as much as $450 million, he said.

        Wallace's Bookstore operates 90 outlets on 60 college campuses in about 25 states.


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