Curtis Carlson Nelson, who once claimed a net worth of more than $29 million, agreed Wednesday to spend his immediate future under a $41.3 million cloud of debt as he fights through Chapter 7 bankruptcy.
In a brief hearing before U.S. Bankruptcy Judge Robert Kressel, Nelson as expected waived his right to have those debts discharged, which effectively would have removed his legal responsibility to repay them.
Dressed in a dark suit with a white shirt and patterned necktie, the 48-year-old one-time heir to the Carlson family businesses, told Kressel he understood what he was doing by waiving his right to discharge his debts.
"Yes I do, sir. I understand," Nelson said from the podium in front of the judge.
"You'll come out of this case still owing all of those debts," Kressel continued.
"OK, thanks," Nelson responded.
The proceeding was over in less than five minutes, and Nelson departed flanked by his two attorneys.
While waiver of discharge means a debtor remains obligated for those debts, it also is a method for limiting legal inquiry into the nature of the debts and has been used by other debtors in the past to fend off allegations of misconduct.
Bankruptcy lawyers say they would recommend such a strategy if legal claims by creditors could overwhelm the debtor financially and if there are allegations of fraud that might be difficult to defend. Nelson, who is broke, has also been sued for fraud.
One of Nelson's attorneys, William Michael of Dorsey & Whitney, said after the hearing that Nelson's legal team is attempting to structure a "global resolution" of the debt picture with creditors and bankruptcy trustee Randall Seaver.
Michael declined to offer specifics of the plan but said he hopes to have it in place "in the near future." Michael said the potential deal would be "fair to creditors."
Seaver declined a request for comment Wednesday.
Assets that could be part of the settlement include household goods, vehicles, personal goods and jewelry. Nelson's largest debts are family-related, including obligations to family members and trusts.
Nelson's grandfather, Curt Carlson, founded the company that bears his name and includes such brands as Country Inns & Suites, T.G.I. Friday's and Carlson Wagonlit Travel.
Nelson left the company after suing his mother, Marilyn Carlson Nelson, and Carlson Companies five years ago when he was passed over for the top spot.
A series of bad investments followed, including an automotive marketing company that failed in 2010, which forced Nelson into Chapter 11 reorganization and ultimately into Chapter 7 liquidation under the federal bankruptcy code.
David Phelps • 612-673-7269