By John Clark
Just a few months after creditors accused him of committing bankruptcy fraud, the former head football coach at the University of Arkansas has settled his bankruptcy case, according to a report from Arkansas Business.
Sources say John Smith reached a deal with his creditors, but he will have to return hundreds of thousands of dollars following his Chapter 7 bankruptcy filing.
John Smith Dodges Charges of Bankruptcy Fraud
According to sources, John Smith, as well as his wife and children, have agreed to return $165,000 in cash and $600,000 worth of property to creditors to quiet claims of a “fraudulent transfer” prior to filing for bankruptcy.
The trouble for Smith started several months ago, when creditors complained to Smith’s bankruptcy trustee, John Lee, that Smith had transferred a large amount of money in order to keep it from his creditors.
The trustee eventually discovered that Smith and his wife had moved more than $500,000 into a revocable trust held by the wife between 2008 and 2012.
During that same period, Smith and his wife also transferred roughly $120,000 into accounts held by their children, according to an investigation by Lee.
But while the transfers were allegedly fraudulent, Lee noted in court that the recipients of the funds had “potentially valid defenses,” which may have made it more difficult for creditors to reach the money.
So, in an effort to ensure that they received some money, Smith’s creditors agreed to settle the dispute, despite the fact that they may have recovered more money had they pressed the issue further.
Smith Received Large Payments Before Filing Bankruptcy
In addition to the transferred funds, Smith also reportedly received upwards of $167,000 from the University of Arkansas right before filing for bankruptcy. The trustee ruled that these funds could be reached by creditors.
But the settlement is, in some respects, a victory for Smith, who is looking to discharge more than $17 million in debt during his Chapter 7 case.
And the price he paid to salvage his bankruptcy case seems to pale in comparison. In addition to the cash, Smith will also cede the rights to 44 acres of empty land in Kentucky. The land is worth roughly $600,000, according to sources.
In his defense, after the settlement was reached, Smith also tried to preserve his reputation by noting in court documents that he was innocent of all “allegations of inferences of bad faith or intent to defraud,” sources say.
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