"The foundation remains hopeful that it will be able to reorganize, and that the trustee will take a fair look at what it will take to reorganize and continue to make the program available to schools," said Grant Sumsion, an attorney for NSFF. "And above all my client is anxious to do all that it can to continue to operate its business in such a way as to enable it to make the greatest payments possible to the schools."

Sumsion said the civil suit in Minnesota could be moot after the bankruptcy case concludes, and he believes suits are not likely from schools in any of the other states. "I think that through the investigation that the Chapter 11 trustee will necessarily do, I think that it will demonstrate that the allegations made in Minnesota are unsubstantiated," he said. "I don't think that there will be suits in other states for the simple reason that the bankruptcy mechanism is designed to bring all the claims into one place, and to do so (file suits elsewhere) would violate the bankruptcy code."

Giani said her office's investigator, Kent Nelson, testified at last Tuesday's bankruptcy hearing. She said Nelson thinks NSFF may not attempt to recover its charitable solicitation permit but instead may try to become a for-profit company. Giani said she would have problems with that, given the foundation's past.

Sumsion said though that is not the foundation's first choice, it may be an alternative.

"I think that we have to consider it as an option, but it's not so much that that's something that the foundation wants to do, but its something that the foundation's willing to do if that's what would best enable it to continue to make the LIFT America program available and maximize payments made to the schools," he said.

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E-mail: mdecker@desnews.com