UPDATE: USA Today Goes Inside Razorbacks Coach John L. Smith's $40 Million Bankruptcy

by Arkansas Business Staff  on Friday, Oct. 5, 2012 7:40 am  

USA Today on Thursday published an in-depth look at Razorbacks football coach John L. Smith's bankruptcy, citing documents that show Smith claiming not to understand the terms of a real estate venture he joined with five other investors.

On Wednesday, Smith, 63, filed amendments to his original Sept. 6 Chapter 7 bankruptcy, showing the coach faced liabilities of $40.7 million, up from the $25.7 million he first identified.

The amended document now shows an additional $15 million owed to Branch Banking & Trust in Louisville, Ky. In his earlier filing, Smith listed the debt as "unknown." The debt, which Smith had personally guaranteed, is tied to Terra Springs LLC, a residential real estate investment entity in Louisville, Ky.

The filing said Smith is disputing this amount.

"It was just a matter of research and finding out everything that's out there, different loans," Smith told Arkansas Business sister site ArkansasSports360.com on Thursday afternoon. "To be honest with you, I don't know how many different loans there are."

USA Today's report, available here, details some of the events leading to Smith's bankruptcy. It also cites a Kentucky judge, acting in a 2011 lawsuit against Smith, who faulted Smith for avoiding his financial obligations in a real estate investment partnership that began in 2006.

According to the report, while the partnership's other investors tried to keep up with debt payments, "Smith claimed he was being unfairly punished because he no longer could make the 'substantial' payments required of him ..."

The judge in the case, Audra Eckerle, said the coach was not "duped" into signing the notes and had ample time to read and understand terms of the deal, the report said.

"Smith is a sophisticated businessman capable of understanding terms and entering into legally binding contracts," Eckerle said, according to USA Today. "Having failed to either read or comprehend the significance of the ... provisions, he may not now assert that he was fraudulently induced to sign."

The newspaper also reports that one of Smith's real estate partners, Louisville developer Steve Canfield, accuses Smith of leaving Smith's partners "holding the bag on a lot of things." None of the other partners would comment for the story.

On Thursday, Smith responded to Canfield's comments to USA Today.

"Well, when this is all over I could go through it with you over who held what bag," he said.

Smith's financial woes have emerged has another distraction in a lackluster University of Arkansas football season. In recent weeks Smith's brother died, and Smith mistakingly referred to Arkansas as "Alabama" in a speech at the Little Rock Touchdown Club.

 

 

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