State Sen. Michelle Benson and her family are facing financial distress, with her husband Craig Benson seeking personal bankruptcy protection after he bought a business in 2013 only to see it fail.

"We took a risk, and we failed, and we worked really hard for five years, paid our employees, followed the rules, and it still didn't work," Michelle Benson, a Ham Lake Republican, said Monday. "And now my husband is trying to protect his family."

Benson is the influential chairwoman of the Senate Health and Human Services Committee and a deputy majority leader.

Asked if she would stay in the Senate, Benson was noncommittal: "We'll see what comes. I have a couple more years on my election certificate," she said. The Senate is not up for election until 2020.

"But I have made it clear I would protect my caucus," Benson said, referring to the Republicans' tenuous hold on the majority. The Senate is now 33-33, with a special election in a Republican-leaning district in November.

"If it becomes too problematic for me to retain my position, I will step back," she said. "I didn't hurt anyone on purpose. We tried so hard. So we will deal with the consequences that come."

Bankruptcy law allows a husband and wife to file separately or jointly, as with their taxes, said Christopher Soper, who teaches bankruptcy law at the University of Minnesota Law School.

Michelle Benson said the business was in her husband's name, with his personal guarantee, requiring the recent bankruptcy. In recent years, Benson, who earned a master's degree in business administration from the University of St. Thomas, has spoken frequently about running the business with her husband.

Craig Benson's bankruptcy filing lists about $630,000 of assets — most of that comprising the couple's $500,000 home in Ham Lake — and $2.12 million in liabilities, including $1.3 million owed to the federal Small Business Administration. The now defunct company, Hugo-based Micra Enterprises, was a steel fabricator.

Rick Burr is owed $133,000 after helping to finance the sale of his company to Benson in 2013.

Burr said he is incensed.

"I feel like to some extent that they stole my business, and they're stealing my money," Burr said. "This is my whole life's work: 32 years I spent building this business and paying employees."

Burr won a judgment against Benson for $133,000 in Anoka County District Court on the money he is owed.

Michelle Benson declined to comment directly on Burr's allegations: "If he wants to call me personally I'm happy to talk about it, but I'm not going to do a tit-for-tat in the newspaper. If he wants to malign my husband, that's on him."

But Benson spokeswoman Katie Fulkerson said the Bensons were faced with an obstacle right from the start, citing 2012 Hugo City Council meeting minutes that showed the city considering revoking a conditional-use permit unless work was done to bring the property up to code: "The seller didn't disclose the fact that the city was about to revoke his permit without $100,000 worth of building renovations," Fulkerson said in an e-mail. "Craig Benson bought the business in June 2013 and inherited this problem."

Burr said he has no idea where the $100,000 figure comes from, and he rejected the allegation: "They can make all the excuses they want. They bought my business. They ran it for five years. And now they're coming back and saying it's my fault?"

Aside from the Small Business Administration and Burr, Craig Benson owes $50,000 to Benson family members; more than $35,000 to JPMorgan Chase for credit card debt; more than $23,000 to two more banks, Navy Credit Union and USAA; as well as tens of thousands of dollars in corporate debt that Benson personally guaranteed, including $86,000 to Neo Industries.

Michelle Benson, who is a leading voice for fiscal conservatism in the state Senate and often an opponent of government intervention in the economy, said that she and her husband are seeking government help — in the form of the bankruptcy court — to help them get back on their feet.

Sen. Paul Gazelka, the Republican leader, praised Benson in a statement and said risk-taking is the heart of the jobs economy.

"This is a personal setback that will have no effect on Sen. Benson's strong leadership," he said. "I know she will continue to faithfully serve her constituents with character and integrity."

J. Patrick Coolican • 651-925-5042

(The Minnesota Star Tribune)