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Smith deferred 71% of income prior to bankruptcy
Arkansas head coach John L. Smith watches from the sideline during the fourth quarter against Texas A&M on Saturday, Sept. 29, 2012, at Kyle Field in College Station, Texas.
FAYETTEVILLE A week before University of Arkansas Razorbacks Coach John L. Smith filed for bankruptcy he arranged to have $600,000 of his $850,000 in pay deferred until after the season, according to documents obtained through a Freedom of Information Act request on Monday.
A personal services and guaranty agreement was signed on Aug. 30 by the Razorback Foundation, Inc. and JLS Consulting, LLC to pay two $300,000 installments to the limited liability company on Dec. 31, 2012 and Feb. 23, 2013.
JLS Consulting, LLC is licensed to John L. Smith, according to the Arkansas Secretary of State office. The Razorback Foundation is the nonprofit fundraising arm for the UA's athletics program.
The money owed to Smith by the foundation is for his appearances on a weekly radio show and TV show for the university's head football coach.
By deferring 71 percent of his pay until several months after his bankruptcy filing, Smith could keep it from his creditors, a Sunday USA Today report quoted bankruptcy experts as saying.
"It was an obvious attempt to avoid having to turn the cash over to the Chapter 7 bankruptcy trustee and alter the amount of income he had to show," Scott Ehrlich, a professor and bankruptcy expert at the California Western School of Law, was quoted by USA Today as saying.
The UA hired Smith in April to replace former head football coach Bobby Petrino, who was fired earlier that month for misconduct. Smith signed a 10-month contract with the university on July 10, effective April 24, the date which he was officially introduced as the Razorbacks' coach.
It isn't uncommon for a formal contract, which often takes some time to prepare, to vary from the original letter of agreement. For instance, Petrino's first contract at Arkansas had revisions from his letter of agreement.
Last week, Smith updated his bankruptcy form to state he had earned $134,832 from UA year-to-date, the newspaper reported. If he had been paid the full amount of his $850,000 contract monthly, it would have been about $425,000, the report said.
The report quotes bizfilings.com, a legal information website for small businesses, as stating debtors should consider future profits when filing for bankruptcy and the filing date is the "line of demarcation". The website discourages signing lucrative contracts until after completing bankruptcy, however, to avoid allegations of fraud.
Smith was asked Monday whether he arranged with the university to defer payments until after the season but declined comment.
"I'll comment on football," he said during his weekly press conference. "I'd rather not comment on any of that. That's not in my hands.
"I'm preparing for Kentucky."
An Oct. 3 filing put Smith’s liabilities at more than $40.6 million and assets at $1.3 million, the Arkansas Democrat-Gazette reported last week. Smith originally filed for Chapter 7 protection on Sept. 6, listing $25.7 million in liabilities.
Smith is set for a meeting Friday with creditors in U.S. Bankruptcy Court in Fayetteville. The Razorbacks are scheduled to host Kentucky on Saturday night at Donald W. Reynolds Razorback Stadium.
Matt Jones in Fayetteville and Katie Dougherty in Little Rock contributed to this report