Durham, N.C. — A legal challenge to a bankruptcy claim by a former Durham mayoral candidate has been dropped.

Attorney Jay Trehy said he has withdrawn the motion to dismiss Michael Peterson's bankruptcy claim because it is no longer necessary.

Peterson, a one-time millionaire, was convicted in 2003 of first-degree murder in connection with the death of his wife, Kathleen Peterson. She was found dead at the bottom of a staircase inside the couple's Durham mansion in December 2001.

Trehy represents Caitlin Atwater, Kathleen Peterson's daughter and Michael Peterson's stepdaughter. She filed the civil lawsuit shortly after her stepfather's murder conviction so that he would never be able to profit from the crime.

Filed just three days before the civil suit was to go to trial in June, the bankruptcy petition listed Peterson's assets of $1,035 and liabilities of just under $520,000.

In court documents filed in June, Trehy claimed Peterson's bankruptcy case was in bad faith and that he filed only to avoid a civil trial.
A civil trial could now begin as early as spring 2007.

Peterson, who insists his wife died in an accidental fall, is serving a life sentence at the Nash Correctional Institution in Nashville, N.C.

In September, the North Carolina Court of Appeals upheld Peterson's murder conviction. The case is likely headed to the state Supreme Court.