A lawyer for 82-year-old Dee Wyly, the widow of Dallas entrepreneur Charles Wyly, came to tears in her plea Tuesday to Bankruptcy Judge Barbara Houser that a neutral mediator be appointed to try to help reach a settlement with the IRS because the IRS was not negotiating in good faith and using Mrs. Wyly as leverage in their case against Sam Wyly. Judge Houser rejected the argument and instead changed the bankruptcy from a reorganization to a liquidation.
“I realize that this is not a good outcome for Mrs. Wyly,” Judge Houser said. “Mrs. Wyly could lose everything.”