Curtis Carlson Nelson, once the heir apparent to run the Carlson corporate empire, filed for Chapter 11 bankruptcy protection this week, listing $41.25 million in liabilities against $4.1 million in assets.
The filing is at least the third economic setback for the Minnetonka businessman since the first of the year and also represents bad news for a string of lenders that provided Nelson with relatively easy access to capital.
Nelson declined to comment for this story Tuesday on the advice of his attorney.
Crown Bank is listed as Nelson's largest unsecured creditor, followed by a host of other banks and lenders. Some of the institutions who made loans to Nelson are prominent ones, including Wells Fargo and U.S. Bank. Others are small institutions, including credit unions in Cloquet, Minn., and Lino Lakes.
Crown Bank said it intends to "aggressively pursue all remedies."
More than half of Nelson's liabilities -- $24.6 million -- are unsecured.
Chapter 11 bankruptcy provides for a court-supervised restructuring of the filer's debt. Creditors might recover a portion of the money owed them.
Nelson's assets are primarily in real estate. He currently owns a second home in Minnetonka adjacent to the one in foreclosure.
In February, Carlson Nelson was the subject of a $3.8 million judgment by Edina-based Crown Bank involving delinquent loans secured by a bogus coin collection. In April, one of his two Minnetonka homes, both co-owned with ex-wife Marjorie Albert Nelson, went into foreclosure after Carlson Nelson failed to make mortgage payments as part of the divorce decree.
Meanwhile, Carlson Nelson is two years in arrears on alimony payments to Albert Nelson, who was awarded $1.28 million as part of the divorce settlement in 2009, according to her attorney.
"She hasn't received one penny," said M. Sue Wilson. "She's at her wit's end. She sees him spending money on everything but what he was ordered to pay by the court."
Wilson said child support for the couple's two teenage children is current.
Nelson left the family business, then known as Carlson Cos., in 2006 when it became clear he would not become chief executive of the travel, hospitality and marketing conglomerate.
He subsequently got into a legal dispute with his mother, Marilyn Carlson Nelson, head of the family-owned company at the time, and the Carlson board of directors. The two sides traded lawsuits against each other.
Until then, the younger Nelson was the presumed heir to the top job but was sidetracked by health and addiction issues, as well as some questionable business transactions. The suits eventually were dropped.
Carlson's worldwide brands include Country Inn and Suites hotels, T.G.I. Friday's restaurants and Carlson Wagonlit Travel. Patriarch Curt Carlson founded the company in 1938 as the Gold Bond Stamp Co. in downtown Minneapolis.
Carlson Nelson, 47, worked his way up through the ranks of the company from Country Kitchen busboy and dishwasher to chief operating officer of the entire operation.
Family consultant Tom Hubler said Nelson's history of addictions may have influenced his financial decisions.
"Money becomes a corruptive kind of thing," Hubler said. "People spend without regard to values. The alternative is community service and philanthropy."
David Phelps • 612-673-7269