Bankruptcy court rules against Stokes

A U.S. Bankruptcy Court judge on Monday denied KGEZ radio station owner John Stokes' bid to withdraw his Chapter 11 bankruptcy filing and instead granted the trustee's motion to convert the bankruptcy to Chapter 7.

Under Chapter 7, Stokes will lose control of his assets.

The ruling by Judge Ralph B. Kirscher came five weeks after the Aug. 13-14 bankruptcy hearing held in Missoula in which Stokes represented himself.

Stokes did not immediately return calls on Monday requesting comment on the conversion to Chapter 7.

But earlier, on Sept. 3, Stokes had said he is awaiting the outcome of separate lawsuits he filed against Todd and Davar Gardner, who own Gardner RV and Auction near the radio station, and against his former attorney Greg Paskell.

"Once I get those judgments I won't be bankrupt," Stokes had said at the time. "The $3.8 million 'slander judgment the Gardners won against Stokes' won't stand."

And, he claimed then, "they've still got to go through the (Federal Communications Commission, which he said owns the station's license) É It'll take a year for that process. They've got to show it's in the public good to close the station É It takes seven or eight years to close down an FCC station."

But Kirscher found case law indicating "no merit in Debtor's contention that this Court lacks jurisdiction to convert the case to Chapter 7 without FCC approval," the judge wrote.

"The Debtor created the estate when he filed his Chapter 11 petition, and the estate includes the FCC radio license É the (U.S. Trustee) is aware of the requirement for any trustee appointed to proceed accordingly in the FCC, and Stokes' objections can be raised and decided in that forum."

Under his Chapter 11 status, Stokes has been considered a debtor in possession, Kalispell City Attorney Charles Harball said. He continued to run his radio business and manage his property, but he had to meet reporting requirements set by the bankruptcy court.

Now, under Chapter 7, he loses control of his assets.

Dick Samson, a Missoula attorney, was appointed by the U.S. Trustee Office to take control of the assets and make decisions in the best interests of the creditors and designed to preserve the value of Stokes' estate. Samson did not return phone calls Monday, but Harball said Samson could enter an agreement for Stokes to keep running the station, or he could lock it up and sell the license and other assets.

"I don't think the bankruptcy judge had a lot of choice but to do this," Harball said.

"There are a lot of different reasons to convert it to a Chapter 7, those being that he really was not cooperating with bankruptcy law and providing the confirmation that everyone needs him to do," the city attorney continued.

"He got caught up in a lot of different stories and the bankruptcy court didn't find him very credible. Judge Kirscher did a good job of pointing out inconsistencies."

Harball testified on behalf of the city in the case, because KGEZ's radio towers extend 150 feet into the necessary airspace of an anticipated expansion at the city airport.

In another of many legal moves that have characterized Stokes' approach, he said on Sept. 3 that he intended to file a claim of perjury against Harball. He has done so, Montana's U.S. Bankruptcy Court Clerk Bernard McCarthy said, and a hearing is scheduled in October.

Stokes claimed Harball "absolutely lied in open court. He said there are absolutely no plans for a city airport expansion. He said there's been some discussion about it, but no plans."

But the record in Judge Kirscher's Sept. 21 decision shows otherwise.

"Harball testified that the City has not yet decided to expand its airport, has not decided to make an offer to Stokes for the towers, and has not yet begun condemnation proceedings against the KGEZ towers," Kirscher wrote of the Aug. 13-14 hearing, "but that if the City wants to use FAA funds to expand its airport it must mitigate the towers."

The difference lies in the city discussing plans for the airport expansion, but not making a decision to actually do it.

Stokes also said on Sept. 3 he intended to file a lawsuit against Flathead District Judge Katherine Curtis alleging jury tampering that denied him a fair trial. One juror was released, he said, after learning some information about Stokes outside the courtroom during the trial, but two other jurors in the same situation were allegedly not released.

Kirscher found Stokes had filed no such suit.

Reporter Nancy Kimball can be reached at 758-4483 or by e-mail at nkimball@dailyinterlake.com