Arkansas coach's debt hits $40 million, filing shows

By Brent Schrotenboer, USA TODAY Sports | USATODAY

Arkansas football coach John L. Smith filed amended documents in federal bankruptcy court Wednesday that show his financial situation is even worse than he first reported two weeks ago.

He has $40.7 million liabilities and $1.3 million in assets,according to the updated documents. On Sept. 19, he reported he had $25.7 million in liabilities and $1.2 million in assets.

The difference appears to be $15 million in newly listed debt owed to Branch Banking & Trust in Louisville, Ky., where Smith coached from 1998-2002.

The amended documents also show he recently has cashed in a life insurance policy, stocks and a joint annuity with his wife to pay bills and add money to his checking account. He now shows $22,000 in his checking account after he cashed in a joint annuity with Fidelity that was worth $141,715. He split the proceeds with his wife and used $50,000 to pay attorneys' fees, taxes and other bills. The rest went into that checking account, which had just $500 in it according to his previous filing on Sept. 19.

Smith filed for Chapter 7 bankruptcy Sept. 6 in an effort to liquidate his debts. Most of his assets are tied up in retirement accounts totaling about $1.3 million. He has $300 in "pocket money," according to the filing.

In March, he cashed in a life insurance policy that had a face value of $100,000, but a cash surrender value of $5,416. After he cashed it, records show he applied the $5,416 to premiums due and canceled the policy.

According to the new documents, his biggest liabilities are the $15 million claimed by Branch Banking & Trust and $20 million owed to Terra Springs LLC, a Louisville company that was formed to purchase loans that Smith and other investors owed for real estate investments.

Much of his financial difficulties stems from those deals.He joined those investors around 2006, betting big on real estate around Louisville that soon dived in value as the housing market cratered.

The $15 million claim by Branch Banking & Trust is the "debt of Terra Springs with debtor's personal guarantee," according to the filing. Smith stated it may be more than $15 million. Smith separately lists a $20 million claim by Terra Springs, stating he doesn't "know how much is claimed by this creditor."

Smith signed off on the new documents Wednesday, adding more troublesome details to a season that's quickly slipped off a cliff. After opening the season in the Top 10, Arkansas has lost four straight games to fall to 1-4, including embarrassing losses to Louisiana-Monroe and a 52-0 shellacking by Alabama.

Personal issues have made it worse for him. Two weeks ago, Smith attended the funeral of his brother in Idaho. Last week, he was lampooned for mistakenly referring to his Razorbacks as a "state of Alabama" program during a luncheon for boosters.

In April, he agreed to a 10-month contract with Arkansas for $850,000. But he states in the bankruptcy filing he only has about $20,000 in monthly income. It's not clear from the documents how he's accounting for the rest of his compensation from Arkansas. The university referred questions about his bankruptcy to his attorneys, which didn't return messages seeking comment.

He lists $107.66 in net monthly take-home pay after payroll deductions and monthly expenses, which include $900 for "hospital, etc.," $1,800 for food, $450 for charitable contributions, $545 for rent of mortgage and $200 for clothing.