Three banks petitioned for the Chapter 7 bankruptcy; Paragon Commercial Bank, Franklin Federal Savings Bank and Citizens Bank & Trust say they are owed a combined total of $2.47 million from bad real estate loans.
Earlier this month, French’s lawyer Bill Baldwin, fought unsuccessfully to block a motion by Paragon to appoint an interim trustee to begin securing French’s assets prior to the bankruptcy being approved. This week French submitted an answer to the petition itself, admitting to the debts but asking for the petition to be dismissed.
French faces sentencing May 3 for federal fraud charges.
Yesterday bankruptcy judge Douglas Tice approved the Chapter 7 petition filed by the banks.
Bruce Matson of law firm LeClairRyan, who was appointed interim trustee, resigned as trustee following approval of the bankruptcy, citing a conflict of interest.
The next steps will be for a new trustee to be appointed and for additional creditors to file claims against French.