UPDATE: Creditors Meet in John L. Smith Bankruptcy Case

by George Waldon and Chris Bahn  on Friday, Oct. 12, 2012 2:46 pm  

John L. Smith (Photo by CBS Sports)

A Friday meeting of creditors in the personal bankruptcy of Arkansas Razorbacks football coach John L. Smith produced a few lighthearted moments.

But portions of the cordial half-hour meeting in Fayetteville's John Paul Hammerschmidt Federal Building underscored the stress and damaged relationships from real estate deals gone bad in Kentucky.

Lawyers representing only three of the 38 potential creditors listed in Smith's bankruptcy petition attended the hearing: John D. Rhodes of Louisville, a former business partner; RLBB Acquisition LLC of Louisville; and Signature Bank of Fayetteville.

In a meeting led by bankruptcy trustee John T. "Terry" Lee, creditors had the opportunity to gather more information from Smith, under oath, about his business dealings.

In the end, Lee requested more documents from the parties before he begins divvying up Smith's assets as payment to creditors. Lee said he might hold a second meeting if new questions arose.

During the meeting, Smith said he alone was being sued by other business partners, although other individuals signed personal guaranties as well.

"Everyone signed the note," said Smith, whose business relationships in Kentucky stemmed from his time as head football coach of the University of Louisville Cardinals.

At one point in the hearing, Smith said he made no attempt to collect money owed to him by John R. Mason, one of his former real estate investment partners. Mason filed Chapter 7 bankruptcy in 2011.

Was he friend?

"A partner," Smith said.

"A former friend," added Smith's wife, Diana, who sat at the table alongside her husband of 42 years.

Smith's bankruptcy, originally filed on Sept. 6, stems from real estate investments that foundered after the 2008 financial crisis. Last week, he amended his filing to show $40.7 million in liabilities, up from the $25.7 million he first reported.

 

 

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