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Even in bankruptcy, Basinger lives well while town does not

THE BALTIMORE SUN

Carol Clark lost her job as president of the bank in Braselton, Ga., after it was auctioned in actress Kim Basinger's bankruptcy.

Tom Brown, 76, was laid off five years ago when Ms. Basinger, in a burst of publicity, "bought" tiny Braselton, including the hardware store where he worked. Now he fears that he will lose his rented home as she and her investment partner prepare to sell off parts of the town, about 50 miles northeast of Atlanta, which they purchased with big development plans in mind. A neighbor, Terry Kitchens, is worried about the same thing. "If they say, 'Move out,' I get 30 days to load up," Mr. Kitchens said.

Meanwhile, in California, the owner of Golden State Landscape Irrigation and Maintenance, Mark Booth, is still waiting to collect $8,100 for yard work at Ms. Basinger's home in the Woodland Hills section of Los Angeles.

These are some of the not-so-glamorous people caught up in a multimillion-dollar contract battle-cum-bankruptcy brawl between the decidedly glamorous Ms. Basinger,star of "Batman" and wife of the actor Alec Baldwin, and Main Line Pictures Inc.

The Basinger case is hardly a typical bankruptcy. But in its extremes, it highlights some of the ironies of the bankruptcy system, which has been flooded with cases in recent years as the stigma of "going under" has lessened.

For openers, the case is one of those in which the "bankrupt" person manages to keep on living a life of luxury while creditors are forced to wait patiently to collect a fraction, if anything, of what they are owed. For Ms. Basinger, that means living in three homes on both coasts and spending $31,000 a month on clothes, pets and an ex-husband.

The case is noteworthy as well because of the way the bankruptcy court's shield can be used as a sword. Some companies involved in labor disputes have invoked the shield to void union contracts. In Ms. Basinger's case, bankruptcy protection has allowed her to appeal a big jury verdict in the dispute with Main Line without having to post an expensive, perhaps unobtainable, $12 million bond guaranteeing payment if she loses, as required by state law.

That has left small creditors such as Mr. Booth in limbo, as Ms. Basinger and Main Line lurch slowly toward a final ruling on the questions of whether she was legally bound to appear in the 1993 movie "Boxing Helena" and hurt Main Line when she bowed out.

For Mr. Brown, Mr. Kitchens and others in Braselton, a town with a hardscrabble history, the bankruptcy has been a rude awakening from a Hollywood dream. Instead of becoming a tourist attraction tied tightly to Ms. Basinger's name, Braselton is now just another asset in her bankruptcy -- and one with an uncertain future.

As the case drags on, and the lawyers' bills mount (the litigants have already spent more than $3 million chasing each other through the courts), those holding the bag can only guess what they may get.

Creditors desperate for their money have been known to go bankrupt themselves -- though not in this case, said John Reitman, the lawyer for the bankruptcy trustee handling Ms. Basinger's case. But, he said, small creditors cannot afford to force quicker action.

Most creditors fall into this category, said Charles Normandin, who teaches bankruptcy law at Harvard Law School. Bankruptcy's little guys may wind up getting only 10 to 15 cents for each dollar they are owed, he said, but all they can do is wait. "If I had a client come into my office and say, 'I've got $20,000 in an unsecured claim,' I'd say, 'File a proof of claim in the bankruptcy court and forget it,' " he said.

Unsecured creditors are at the end of the line in a personal bankruptcy case. And those lines have multiplied since the 1978 rewriting of the country's bankruptcy law, which generally made it easier for the financially swamped to walk away from most or all of their debts.

Almost 4.4 million corporate and personal bankruptcy petitions were filed in the 1980s -- more than double the number filed in the '70s, according to the Administrative Office of the U.S. Courts. Slightly more than that record number have already been filed this decade, though filings have declined slightly since the 1992 peak as the economy has improved.

Bankruptcies filed by individuals have changed less, Mr. Normandin said. But flashy cases like Ms. Basinger's can annoy those who see so much money flushed through the courts while creditors wait years to collect a few thousand dollars.

The troubles for Ms. Basinger's creditors began in May 1993, when a jury in Los Angeles decided that Ms. Basinger had indeed agreed to appear in "Boxing Helena," a film about a doctor who cut off his lover's arms and legs, and then reneged. JTC Sherilyn Fenn got the vacant role and "Boxing Helena" opened to strong reviews but a weak box office.

Main Line won an $8.1 million award. To file an appeal, a bond of $12 million was required, to take account of interest and expenses that might pile up while the case continued. To get the bond, Ms. Basinger would have had to pledge $12 million in assets and pay perhaps $1 million or more. Five days after the verdict, Ms. Basinger instead filed for bankruptcy protection in Los Angeles. She claimed about $5 million in assets and $11 million in liabilities, including the Main Line award. (Ms. Basinger did not respond to requests for an interview for this article.)

Decision reversed

Last September, the California Court of Appeal reversed Main Line's victory because of the way the jury's decision was worded. The court said it could not tell whether the jury wanted the actress or her solely owned professional service company to pay. If her corporation is liable, her assets and income might be outside Main Line's reach. A new trial, then more appeals, will probably take years unless the sides settle.

While the wheels of justice creak and moan, Ms. Basinger's small creditors -- those who arranged her travel plans or repaired her home -- go unpaid. And the folks of Braselton, population 450, learn that getting too involved with an actress can be dangerous.

"If I move, I'll have to move, I reckon," said Mr. Brown, who came to Braselton 52 years ago to pick cotton for the Braselton clan that owned most of the town. The Braseltons sold 1,691 acres to Ms. Basinger and her backers in 1989. Mr. Brown now rents his unpainted, three-bedroom home from the Braselton/Basinger Limited Partnership for $60 a month, but suspects it will be torn down when the property is sold to a new owner. He doesn't know where he will live then.

Ms. Basinger's lifestyle stands in sharp contrast to that of people affected in Braselton, Los Angeles and elsewhere by her bankruptcy and failure as a developer.

Bankruptcy documents refer to her Woodland Hills house, valued at $600,000, as well as to the apartment in Manhattan and house in Amagansett, N.Y., owned by Mr. Baldwin. His properties are not part of the case.

A July 1993 filing outlines Ms. Basinger's expenses, then running at a rate of $43,000 a month. The actress spent $6,100 a month for clothes and $4,000 for "recreation, clubs and entertainment, newspapers, magazines, etc." Another $7,000 went to "pet care and other personal expenses." Her ex-husband, Ron Britton, received $9,000 in alimony.

A later filing trumpeted that Ms. Basinger had slashed her monthly expenses to $31,000 even though her "life style has never been extravagant or lavish." In one filing, though, she reported $592,000 in furniture and clothing and $192,000 of jewelry.

Main Line argued that Ms. Basinger was not entitled to the protection of Chapter 11 bankruptcy reorganization because she could pay all her debts in full -- if not out of current assets, then through future earnings.

Ms. Basinger, now 41 and starring in the just-released "Ready to Wear," has countered that her high earning years are behind her.

Paying the Main Line claim plus her other debts, with interest, would have been impossible even if she turned over all her after-tax income for the rest of her life, they said. Instead, her payback proposal under Chapter 11 would have combined the sale of some assets with some future earnings.

Last January, with the bankruptcy court seemingly unsympathetic to her efforts to reorganize, Ms. Basinger converted her bankruptcy to a Chapter 7 liquidation.

That meant most of her assets -- including her interest in Braselton -- would have to be sold. Under Chapter 7, Ms. Basinger might get to keep $75,000 or so of her jewelry, furniture and clothing, a $300,000-plus IRA and $50,000 of home equity but perhaps little else. No future earnings, however, would be thrown into the pot under Chapter 7.

The September Court of Appeal decision leaves everything in chaos. With the Main Line judgment reversed, Ms. Basinger could win a new trial and not have to pay the movie company anything, said one of her lawyers, Leslie A. Cohen. In that situation, the bankruptcy case might even be dismissed if her assets once more exceeded liabilities.

Braselton folks seem weary of talk of the actress and her financial turmoil. Newspapers and television programs from as far away as Australia covered her "purchase" of the town.

Braselton residents were excited when Ms. Basinger announced that she was buying their town. There was talk of restoring the turn-of-the-century stores and houses, of making Braselton an historic theme park, of installing a movie studio in the old bank and dry goods building.

Instead, little of note has happened other than the tearing down of some rickety buildings.

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