Cong. OH-18: Padgett (R) Bankruptcy Could Become Issue

Handpicked successor State Sen. Joy Padgett (R-Coshocton) is already making campaign appearances in her quest to replace her close friend and benefactor, disgraced Rep. Bob Ney (R-Heath), in Ohio's 18th Congressional District. Although BSB is reporting that at least four people have taken out nominating petitions for the September 14 special primary, Padgett must be regarded as the front-runner. Eventually, however, I'm guessing that her recent bankruptcy filings are going to join her ugly smear campaign against former Hezbollah hostage Terry Anderson in her last state senate race, and her ties to Taft and Ney, as stumbling blocks to her candidacy.

Ney's primary opponent, James Brodbelt Harris (R-Zanesville), has jumped on the bankruptcy filings as an issue, sending out an email asserting that "[b]y her million-dollar default to creditors and taxpayers under SBA and other loans, Senator Padgett is professionally unfit and an SBA deadbeat, and thus she is not qualified to seek higher office representing Ohioans and American taxpayers." Stripped of the hyperbole, Harris' description of Padgett's financial troubles is as follows. (I have not independently verified the details.) Padgett and husband Don own Main Office Supply on Main Street in Coshocton, Ohio. In August 2004, during her ugly campaign against Anderson, Padgett and her husband borrowed $737,000 under a loan guarantee program of the U.S. Small Business Administration. In October 2005, right before the deadline for avoiding the stricter provisions of the Republican-imposed bankruptcy overhaul, the business filed for reorganization. As Treasurer of the corporation, Padgett signed the papers and petitioned for bankruptcy on behalf of the company. In June 2006, the bank that holds the SBA loan filed to dismiss the bankruptcy due to the Padgetts' default on post-bankruptcy obligations to the bank, and for unauthorized use of cash collateral. The corporate bankruptcy was dismissed on July 30, depriving it of bankruptcy protections. In the meantime, however, on June 15, 2006, Padgett filed for personal bankruptcy, listing over $1,000,000 of estimated debts and at least 17 creditors, including the State of Ohio and the City of Coshocton.

It's hard to say how much this financial embarrassment will affect Padgett's candidacy. However, it certainly doesn't look good, especially since the corporate bankruptcy was dismissed for failure to fulfill obligations imposed by the bankruptcy court, and her personal bankruptcy is a pending proceeding while she campaigns. No minimizing it as something in the past.

UPDATE: Go read an excellent take on this by Anastasia over at DailyKos -- highly recommended!