California readers may be interested to learn about the bankruptcy of former Razorbacks football coach, John L. Smith, who worked with a large university football team until recently. The man filed a personal bankruptcy last year. He has been embroiled in a dispute about his compensation and how it was disclosed to the court.
When a person in California files for a personal a bankruptcy they have many hopes for financial relief, including a discharge as much as their debt as possible. This was likely true for the coach who reported that he owed some $40 million in debt to various creditors. In most Chapter 7 bankruptcy cases, which is likely what was sought by the coach, people are able to discharge all unsecured debts that they disclosed when they filed their petition.
At issue in the recent dispute in the personal bankruptcy case was accusations that the coach tried to hide money from creditors. He was said to have transferred some money to trusts for his wife and children and to have asked that his compensation for coaching at the University of Arkansas be paid to him after the filing, rather than before the bankruptcy. This would have taken that income out of the hands of the trustee who is tasked with using money and assets of a person in bankruptcy to repay some creditors.
The case came to a settlement, as would also be common in a similar matter in California. In this matter, the coach must return some $165,000 in cash and $600,000 in property to the bankruptcy estate. The good news though is that some of this money may be subject to protection from creditors through bankruptcy exemptions. Because the process can be complicated, it may do well for people like Smith to seek advice from those with experience in the personal bankruptcy arena.
Source: CBS Sports, "John L. Smith reaches settlement in bankruptcy case," Jerry Hinnen, May 29, 2013