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.

This, as the Hogs have gone 0-4 after a season-opening, 49-24 non-conference win against Jacksonville State at Fayetteville. Ranked No. 8 by the Associated Press at the beginning of the season, the Razorbacks have since lost to teams including SEC conference rivals Alabama and Texas A&M.

The Razorbacks face Auburn in Alabama on Saturday.

UA Athletics Director Jeff Long has defended his hiring of Smith, which came after Long fired former coach Bobby Petrino in April. Long said Smith was up front with him about his financial troubles during the hiring process. Long said he is committed to keeping Smith aboard through the remainder of season.

"I've tried to make that clear - maybe I don't in my speeches - but yeah, we're committed to this season," Long told reporters before a speech to the Northwest Arkansas Touchdown Club last week. "He's going to lead our team through this season. That's something we made a commitment to back in April and we're going to stand behind that commitment."

On Thursday, Smith was asked whether the bankruptcy had been a distraction for him.

"Not me, and I'm very fortunate," he said. "Because they're taking care of it and I've got a wife that's more on top of it."

 

 

Please read our comments policy before commenting.
Search

Latest Arkansas Business Poll

Should the alcohol amendment remain on the ballot?