Bankruptcy Trustee Flags John L. Smith's End Run Attempt

by Arkansas Business Staff  on Monday, Jan. 14, 2013 12:00 am  

Former Arkansas Razorbacks football coach John L. Smith wants to close his bankruptcy files.

Not so fast, John L. Smith.

The former Arkansas Razorbacks football coach last month tried to push through a motion in his Chapter 7 bankruptcy case that would have allowed his or his former business partners’ attorneys to decide what documents or other evidence tied to his case are confidential. We understand that Smith’s recent two-day deposition was on the list of information that he wanted to keep under wraps.

As for the motion, Smith and the attorneys for his former partners said they believed that “certain information to be discovered in this case is of a confidential, proprietary, and/or legally protected nature.”

The 10-page order was typed and approved by eight attorneys and the trustee, John Terry Lee of Siloam Springs. All that was needed was for Bankruptcy Court Judge Ben Barry of Fayetteville to sign it.

But then the U.S. Trustee who oversees the bankruptcy courts in Arkansas got involved. Nancy Gargula filed a motion Tuesday asking that Smith’s request be denied because the order would limit her ability to monitor the bankruptcy case.

“Whether [Smith] is entitled to a discharge is an issue that affects the integrity of the bankruptcy system,” she wrote in her motion. “The United States Trustee, acting on behalf of the public interest, seeks to ensure [Smith] is not engaging in fraud or abuse of the bankruptcy system.”

Smith’s attorney, Jill Jacoway of Fayetteville, didn’t return a call for comment. Adam Kegley of Lexington, Ky., who represents one of Smith’s former partners, said he couldn’t comment on the case.

It was in Louisville that Smith’s investments in real estate backfired.

Smith, if you recall, said he thought he would be responsible only for a prorated share of the losses of the real estate LLCs in which he invested. He was wrong.

He filed for bankruptcy protection in September and listed $40.7 million in debts and $1.3 million in assets.

 

 

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