Ex-station owner unsuccessful in bankruptcy appeal

Former KGEZ radio station owner and talk show host John Stokes this summer lost a second appeal of a 2009 bankruptcy case that ended when his station was seized and sold off to satisfy creditors.

That leaves Stokes with no more appeals except to the U.S. Supreme Court.

“We had the law on our side, the facts on our side. They just gave us the bum’s rush,” Stokes said of the outcome. “Biggest bankruptcy fraud in the history of Montana.”

The U.S. Court of Appeals for the 9th Circuit found that Stokes not only failed to obtain a stay during his bankruptcy proceeding but never asked for one. The appeals court ordered the U.S. District Court in Missoula to dismiss the case as moot.

“That failure to seek a stay resulted in a full execution of the settlement agreement, including the transfer of all property and the distribution of funds ... Although ‘unscrambling the eggs’ may be theoretically possible, under these circumstances, we believe that allowing Stokes to proceed with his appeal would be inequitable,” the U.S. Court of Appeals wrote.

Stokes said the case is not over. “We have further avenues of appeal we’re pursuing,” he said.

Stokes filed for Chapter 11 bankruptcy protection after a Flathead County District Court jury ordered him to pay $3.8 million for slandering Todd and Davar Gardner on his radio show. 

The bankruptcy court converted the case to a Chapter 7 proceeding, requiring Stokes to liquidate assets to pay off creditors instead of giving him time to reorganize his finances.

Through that process, Todd and Davar Gardner bought the KGEZ radio station for $875,000 in the name of Flathead Broadcasting LLC and secured a broadcasting license from the Federal Communications Commission. 

That purchase satisfied Stokes’ other major creditor, Boone Karlberg Group, which had a first position mortgage and security interest in the radio station property.

As part of that settlement, the Gardners also agreed to reduce their claim from the defamation judgment against Stokes by $2.5 million.

Trent Gardner, who represented Todd and Davar Gardner in the bankruptcy appeal and asked the court to dismiss the appeal as moot, said the Gardners are happy with the outcome and just want to move on.

“The transaction was completed and [Stokes] didn’t make any request for a stay and the Ninth Circuit found that fatal for the appeal,” Trent Gardner said.

 Reporter Tom Lotshaw may be reached at 758-4483 or by email at tlotshaw@dailyinterlake.com.