Enough is enough. Regardless of how poorly in comparison to expectations that University of Arkansas Head Football Coach John L. Smith’s teams have performed on the field, it’s time to push back from the pile some of the commentators, reporters and Pollyannas regarding recent bankruptcy filings in Arkansas Head Coach John L. Smith’s bankruptcy case.
For them and everyone, the long story made short is, “Raise your hand if you understand the intricacies of pre-petition bankruptcy planning law applicable in the State of Arkansas, and what is permissible under that law.” Guess what? THERE IS SUCH A THING, and although there are rules for doing it, it can be done legally according to bankruptcy lawyers. Embarrassment about games is one thing, but insinuation of impropriety on the part of the University of Arkansas or Coach John L. Smith out of ignorance is inappropriate at anytime.^
The best places to read about the filings are at USA Today “Arkansas coach’s bankruptcy case turns contentious” and ArkansasBusiness.com “UPDATE: Creditors meet in John L. Smith Bankruptcy Case.” What’s happened is that creditors’ attorneys want to look into the coaching contract and circumstances between John L. Smith and the University of Arkansas and question him about it because much of John L. Smith’s compensation is deferred until after he filed bankruptcy. As the contract is structured now, the creditors may not reach the money.
Arkansas Razorbacks Fans’ “here we go again” reactions are completely understandable in the light of FOI requests for Houston Nutt’s phone and text records and the same regarding Coach Bobby Petrino, but this should prove to be somewhat different.
This isn’t about lying or cheating. It’s about technical aspects of the United States Bankruptcy Code, and whether the circumstances surrounding the creation of his contract will permit John L. Smith to keep the contract the way that it is and keep the money. It’s also about the freedom of John L. Smith and the University of Arkansas to reach an agreement when he’s in the financial circumstances he was in when hired.
Anyone who follows any NCAA Division I coaching hires and fires and who has looked at any of those contracts in detail knows that deferred compensation is the norm for coaches for whatever reasons. See Google search of “head coach” and “deferred compensation.“ The list of relevant examples is very long. There is nothing unexpected or unusual about coaching deferred compensation agreements.
Too, John L. Smith hired longtime Arkansas bankruptcy attorney and former U.S. Bankruptcy Trustee Jill Jacoway in Fayetteville as his lawyer and isn’t acting on his own here. It’s not known when she came on board as his counsel; however, if she was hired well before the filing, her guidance and expertise provided to John L. Smith prior to the bankruptcy filing would easily be a vastly different situation than previous inquiries. Ms. Jacoway is an expert lawyer who knows what she’s doing before Coach Smith took his next steps. The University of Arkansas would employ able counsel to advise it as well.
The requested creditor examination of records and further questions to John L. Smith are because the creditors simply don’t want to take the University’s word or John L. Smith’s word about why Coach Smith’s contract was arranged the way that it was. If they can find good reasons why the money should be paid to their clients, then they do their job, but there’s area for disagreement here.
The creditors’ inquiries were entirely expected on the part of Coach Smith’s counsel. From page two the Arkansas Business article is the following:
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.”
The biggest things to understand here are that there was an open disclosure of the contract to the Bankruptcy Court and creditors so that the Bankruptcy Court and creditors could examine the arrangement, and second, that the money hasn’t gone anywhere because it’s deferred. It’s in the hands of the University of Arkansas or the Razorback Foundation.
In other words, nothing so far is being hidden about the arrangements, and even if the arrangements are viewed differently than Coach Smith’s counsel or the University sees them, then the money is there for the creditors to get. John L. Smith is following what he sees is a right given to him under United States laws. The creditors want to make sure that John L. Smith’s arrangements to keep money follow bankruptcy laws and if the arrangements fail in some way, they want the money for their clients.
Do you remember the direction at the beginning? “Raise your hand if you understand the intricacies of pre-petition bankruptcy planning law applicable in the State of Arkansas, and what is permissible under that law.”
“Complicated” or “unfamiliar” doesn’t mean “wrongdoing.” Chill.
^ How a great publication such as Forbes allows a jackass like David Lariviere to publish “NCAA Should Investigate Bankruptcy Case of Arkansas Football Coach John L. Smith” is beyond me. He evidences no understanding of either coaches’ deferred compensation agreements or U.S. Bankruptcy laws but thinks that something must be wrong for the NCAA to investigate and rides the Peter Principle of his years of business and sports reporting experience. He’s what’s wrong with sports reporting.
Thanks to @rzrbckredfan @HogWild1978 and @razorbackrachel the conversation that lead to this post.