Bankruptcy official known for sense of fairness

As the bankruptcy administrator for North Carolina's Eastern District, Marjorie Lynch sees what happens when capitalism falters.

These days, she sees it a lot.

Bankruptcies in the district are up 17.5 percent over last year according to court figures. The number of businesses seeking help from the court has more than doubled.

None of this surprises Lynch. After working in bankruptcy law for more than two decades, she has learned to pick up on impending economic trouble.

She told her husband the U.S. economy would nose-dive months before it happened in August. Now, she's knee-deep in monitoring a rising number of cases involving building contractors and real estate developers who can't get credit lifelines from the banks.

Which businesses will be next to resort to bankruptcy protection? Lynch thinks she knows.

"Car dealers," she says. "Car sales are down, and the automakers will probably cut back on the number of dealerships."

Lynch doesn't have a business degree. She majored in political science and English at UNC-Chapel HIll before going to law school at George Washington University in Washington. Her husband, Bruce, a commercial real estate consultant, runs his company and the car wash in Wendell that he and his wife own.

Most of what Lynch knows about financing and managing a business she has learned from mistakes others made. She studied those mistakes first as a bankruptcy lawyer helping companies get out from under crushing debt and then as a bankruptcy administrator who has supervised tens of thousands of cases in Eastern North Carolina in the past 16 years.

Along the way, she has earned the respect of attorneys representing creditors and debtors.

"It would be very easy for her to be a heartless bureaucrat," says Joe Callaway, a Rocky Mount bankruptcy lawyer who has worked as opposing counsel and as trustee under Lynch's supervision. "But Marjorie has a real sense of fairness and equity."

Lynch, 47, the mother of two teenagers, dresses conservatively and wears little makeup. During a day she had court hearings scheduled in her Wilson office, she wore a dark pantsuit and black pumps with 1-inch heels. She leads a Girl Scout troop, drives a Volvo, likes to garden and cook. Her favorite food is pork tenderloin, because, as she puts it, "there are a million ways to fix it."

But she stands out when she speaks. Her voice has urgency and rings with passion. Words tumble out at rapid-fire speed, and she changes subjects effortlessly.

Lynch knew she wanted to become a lawyer when, as a sixth-grader, she watched the Senate Watergate hearings on television. "I was thinking, 'Look at these lawyers,' " she says. "I was impressed by what they did."

Law school fed into her appreciation for rules and her strong sense of right and wrong. She didn't abandon either when she joined a Raleigh law firm specializing in business bankruptcies, then known as Smith Debnam Hibbert & Pahl.

One of the first cases she worked on at Smith Debnam involved the Presbyterian Retirement Center in Tarboro, now the Fountains at the Albemarle.

Seniors' home saved

In the late 1980s, the retirement center found itself unable to pay back millions of dollars in debt. The banks wanted the building and land sold, which would have forced about 200 elderly residents out of their homes. Callaway was the residents' lawyer.

Instead of giving in to the banks' foreclosure demands, Lynch got together with Callaway. They figured out a way for the facility to stay open, so the residents would not have to move out.