Game Show Winnings Subject of Tug-of-War Between Trustee and a Charity

This past November, I reported about a high profile bankruptcy case filed in the Northern District of Georgia, just outside Atlanta. State School Superintendent Kathy Cox and her husband, a home builder, filed for Chapter 7 bankruptcy. According to news reports the filing was triggered by over $3.5 million in losses incurred by John Cox’ failed construction business.

In an unusual twist, prior to filing, Ms. Cox had won $1 million in a TV game show entitled “Are You Smarter than a 5th Grader?” (Reassuringly for Georgia students and their parents, Superintendent Cox is smarter than a 5th grader!). At the time Ms. Cox participated in the game show, she pledged that her winnings, if any, would go to three state run schools – the Georgia Academy for the Blind in Macon; the Georgia School for the Deaf in Cave Spring; and the Atlanta Area School for the Deaf in Clarkston.

The Chapter 7 trustee in the case takes the position that the $1 million belongs to the estate and should be used to pay creditors. The Georgia Attorney General, representing the State Department of Education disagrees, contending that Ms. Cox’ winnings were never intended to go to her personally and that under Georgia State law, funds received by the Superintendent acting in her official capacity belong to the State.

The issue will be considered by a bankruptcy judge in the Newnan Division of the Northern District later this year.

Earlier this week, students, teachers and parents from the three affected schools protested with signs in front of the Chapter 7 trustee’s office.

by Jonathan Ginsberg, Atlanta bankruptcy lawyer