Cult Awareness Network Files Chapter Seven Bankruptcy
June 20, 1996
The Cult Awareness Network, an internationally recognized non-profit which has provided information to the public on the cult problem, filed a motion earlier this week to begin Chapter Seven Bankruptcy proceedings.
The motion, which was approved by Judge Barliett of the United States Bankruptcy Court for the Northern District of Illinois, begins a process, under the courts protection, of divesting CAN of its assets.
CAN had originally entered a Chapter 11 Bankruptcy last October, hoping to develop a reorganization plan that would permit it to continue to operate in the face of a crippling damage award assessed against it in civil litigation brought in a federal case in the state of Washington by plaintiff Jason Scott.
CAN filed its reorganization plan, but in the face of vigorous opposition to the plan raised by Scotts attorney, the plan was not approved by the Bankruptcy Court, clearing the way for Scott to begin collection proceedings unless CAN entered the Chapter Seven.
The Scott case is on appeal in the 9th Circuit Court of Appeals. CANs attorney, Paul Lawrence of the Seattle firm of Preston, Gates and Ellis, expects the appellate brief for CAN to be filed by late August. Lawrence is the President of the Washington State American Civil Liberties Union.
Ironically, CAN has also filed a petition to the Illinois Supreme Court asking the high court to review a case dismissed by the Circuit Court of Cook County which names Scotts attorney, Kendrick Moxon, his partner Timothy Bowles, and the Church of Scientology International as defendants for bringing multiple cases in an attempt to destroy CAN financially with litigation. The Chicago firm of Mayer, Brown & Platt are representing CAN pro bono in that matter.
The Chapter Seven bankruptcy halts two other cases against CAN, one in Superior Court for the County of Los Angeles brought by Scientologist Robert Lippman, and the other brought by Landmark Education Corporation in the Circuit Court of Illinois. Landmark, a for-profit organization, sued CAN, its president, William Rehling, and Cynthia Kisser its executive director. The Landmark case continues against Rehling and Kisser.
Court-ordered arbitration in the Lippman case has determined Lippmans claim is meritless. In the Landmark case, Landmark has refused to file a proof of cost establishing it has actually suffered any damages because of CAN, Rehling or Kissers actions, publications or statements concerning the controversial organizations reputation and activities.
As part of the Chapter Seven proceedings CAN will recommend to the Chapter 7 Trustee that it offer for sale the right to collect judgments for tens of thousands of dollars in costs awarded to CAN against several Scientologists in past cases terminated in CANs favor in California and Illinois. Persons interested in details about such a sale should contact the Chapter 7 Trustee, whose name is available through CANs bankruptcy attorney Benjamin Hyink of Hyink & Scannichio, Chtd. In Chicago at XXX-XXXX.
Of particular concern to CAN is what will happen to its archives of information on the cult issue and its confidential records of callers and donors. Without the resources to mount constitutional and public interest issues and safeguard these documents, CAN is concerned its critics will try to acquire and destroy the archives and subject the donors to harassment or intimidation. At this point public interest organizations will need to contact the Chapter 7 Trustee to have these issues addressed because CAN has no resources to present these issues.
CAN is hopeful that it will not be forced to close down before its appeal on the Scott case could be heard, but is realistic that the appeal may not be ruled upon in time to prevent its demise.
"Weve been backed into this corner," said Kisser, "simply because of the massive amount of litigation we have had to face in the approximately 50 cases brought by Scientologists against us in 1991. If you get sued 50 times over four years the odds are that youre going to suffer losses at some point. What has happened to us is wrong. The record is clear on this for anyone who takes the time to review whats been laid down in the courts."