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)

Creditors holding the biggest unsecured claims are a quartet of Louisville entities: Terra Springs LLC, for $20 million; Branch Banking & Trust, $15 million; Republic Bank, $2 million; and King Southern Bank, $902,000.

During the hearing, Smith was asked specifically about the $15 million liability linked to a land development loan made by Branch Banking & Trust of Louisville. He wasn't sure who now owned the loan originally made to the Terra Springs investors.

"I assume it was bought by partners for pennies on the dollar," Smith said.

Smith also listed a pending counterclaim of unknown value against Terra Springs LLC among his $1.3 million in assets.

Creditors also learned more about Smith's share of his deceased parents' 8-acre property in Iona, Idaho, valued at $2,000 on his bankruptcy filing. Creditors learned about a home on that property, valued at about $160,000. Because Smith has three siblings who also hold an interest in the property, Smith's share of the home would be worth $40,000.

Smith said he didn't know any additional details about the potential value of real estate listed in his bankruptcy.

"I've been out of the loop with the partners for three years," Smith said.

Smith's bankruptcy has raised some questions about how he and the University of Arkansas negotiated his 10-month, $850,000 employment contract. Smith arranged to have $600,000 of his $850,000 in pay deferred until after the season, with a $300,000 payment on Dec. 31 and another $300,000 on Feb. 23. 

The deferral raised legal questions about whether Smith's salary is accessible to creditors. The university has said it is not out of the ordinary for coaches to negotiate deferred payment as part of their contract.

On Friday, Jill Jacoway of Fayetteville, Smith's bankruptcy attorney, echoed the university's comment.

"Everybody does it different, and it can be structured differently," she told reporters after the hearing. "It’s all negotiable."

Jacoway said creditors will consider going after the money.

"And then what we do is we come in front of Judge [Ben T.] Barry and we fight. And Judge Barry makes up his mind," she said. "And if one side or the other doesn’t like what Judge Barry says, then we appeal and we appeal and we appeal."

 

 

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