Funny Business

Published: Tuesday, 27 Oct 2009 | 4:52 PM ET

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Lenny Dykstra's bankruptcy case has been converted from a Chapter 11 reorganization to a Chapter 7 liquidation. Judge Geraldine Mund said bluntly, "Right now it looks like everything is under water."

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AP

Dykstra is no longer in charge of his own estate.

The judge earlier appointed a Trustee to handle the Chapter 11, and it's very likely that same person will continue to oversee the liquidation. One of Dykstra's two homes inside Sherwood Country Club is already listed for sale, and Fireman's Fund has already provided $500,000 to clean up a mold problem there. The second house, the larger mansion Dykstra bought from Wayne Gretzky in 2007 for $17.5 million, is still in a state of disrepair after Dykstra removed portions of flooring and fixtures to try to prove water damage.

Attorney Leonard Shulman, speaking on behalf of the estate, said, "This is a very sophisticated and complex case with quite a bit of litigation that can, and should, be pursued." He said his office is working with Fireman's Fund to settle for "just north of $1 million" to cover damage to both homes and to drop claims of bad faith against the insurer. Dykstra says that leaves only about $500,000 to repair the larger house, which "won't even pay my experts to get started" on repairs.

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However, any settlement money will go to the estate, not to Lenny Dykstra. The former World Series champion vented in court that the estate's lawyers weren't looking after his interests. "I just heard everyone talk about everyone else. But what about Lenny?" Judge Mund advised Dykstra to get his own attorney. "Estate attorneys are not you." She appeared to grow impatient as the hearing dragged on, as she was facing a full docket for the day, including an update on the bankruptcy of actor Robert Blake, who went broke defending himself against murder charges. Only in LA...

Meantime, Index Investors, which moved to foreclose on Dykstra's house last summer because it claims he owes $900,000, says the home Dykstra bought for $17.5 million in 2007 is now valued at $11.5 million. "I don't have a lot of confidence funds will be generated from the estate," said Index attorney Bruce Speiser.

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Finally, Dykstra complained in court that his estranged wife has plenty of money (including his pension) while he has nothing. "I live in the street," Dykstra said. "I don't want anything special. My wife gets $25,000 a month, and she's got $300,000 cash. You know what I got? Zero...I couldn't even buy gas for my car."

Later, outside court, a CNBC producer asked Dykstra if he was truly living on the street. He replied with a smile, "No. I can live anywhere I want."

The next hearing in the case is set for December.

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