Bill Schwyhart, a prominent developer during the Northwest Arkansas real estate boom, has filed more detailed information revealing he owes more than $90 million to creditors as part of his Chapter 7 bankruptcy protection action in U.S. Bankruptcy Court in the Northern District of Texas.
Schwyhart partnered with late trucking magnate J.B. Hunt and Tim Graham on the Pinnacle Hills Promenade mall, which opened in 2006. He was also one of the investors, along with J.B. Hunt, in the now defunct chartered jet company Pinnacle Air LLC, which did business as Aspen JetRide, and filed for Chapter 7 bankruptcy in early 2009.
After J.B. Hunt's death in 2006, his widow, Johnelle Hunt and Graham broke ties with Schwyhart. They later sued Schwyhart claiming he defaulted on various loans. Schwyhart and longtime business partner Robert Thornton formed Pinnacle Investments LLC after the split. In April 2010, eight development companies managed by Schwyhart filed for bankruptcy claiming nearly $42 million in debt.
In his initial bankruptcy filing on July 6, Schwyhart listed a Dallas address and noted the preponderance of his debts were business-related. The most recent documents were filed on July 20.
Professor Tim Tarvin of the University of Arkansas School of Law at Fayetteville, who teaches bankruptcy and nonprofit law, said by filing Chapter 7, Schwyhart's property and retirement savings are generally protected from creditors as long as there is no fraud involved. He said it will be important for Schwyhart to establish his residency in Texas for at least two years if he's seeking protection under Texas code.
Schwyhart and his wife, Carolyn, claim assets of a little more than $600,000, mostly in the form of individual retirement accounts, as well as vehicles, furnishings, collectibles and jewelry. The couple reports monthly income of $1,167 and monthly expenses of $6,475.
Schwyhart lists $90.1 million in debts, of which $19,408 is secured by property and $90,100,017 is listed as nonpriority unsecured claims.
Tarvin said it is striking that a person could accumulate more than $90 million in loans with no collateral. He said in similar large bankruptcies, some major creditors can absorb hits but often the smaller creditors suffer the most, since they don't have reserves to fall back on.
Some of the primary claims include Bank of America with $18 million; Springfield, Mo.-based Great Southern Bank with $14 million; John P. Calamos of Naperville, Ill., with $11.4 million; Little Rock-based JB Hunt LLC, with $10.7 million; Pine Bluff-based Metropolitan National Bank with $5.1 million; and Fayetteville-based Low Tide Holdings, which has been dissolved according to the Arkansas secretary of state's website, with $4.5 million.
Calamos is the chairman of financial company Calamos Asset Management. He became a partner with Schwyhart when Calamos' Ajax merged with Pinnacle Air.
The filing also listed Bentonville-based CHP LLC as a creditor but didn't include an amount owned.
CHP, an investment group, filed suit in Benton County Circuit Court on May 30 claiming Schwyhart and several John Doe defendants fraudulently hindered collection efforts when Schwyhart, pretending to be caretaker of 9 Clubhouse Drive in the Pinnacle Hills Subdivision in Rogers, was actually the owner of the property through shell company Pinnacle Villa LLC.
In February, Regions Bank transferred a $209,212 judgment, in a 2009 suit against Schwyhart Holdings LLC and others, to CHP, making CHP a successor in interest. As part of that case, on April 19, Judge John R. Scott issued a protective order covering a confidential settlement agreement made as part of a 2013 lawsuit between Schwyhart and Low Tide Holdings, which is owned by Graham.
During a May 16 deposition that was part of court filings, Graham said Low Tide Holdings conveyed No. 9 Clubhouse Drive to Pinnacle Villa LLC. Graham said he wasn't involved in the the settlement but understood from conversations with his lawyer the move was part of a negotiation to settle the lawsuit.
When asked, Graham confirmed that Pinnacle Villa had no interest in that lawsuit. He also said he didn't know if Schwyhart or Schwyhart Holdings got any benefit from the settlement.
CHP attorney James R. Baxter of the Baxter Law Firm in Benton asked Graham if the fact that the specific house was part of the deal didn't make him think that Schwyhart wasn't involved in wanting the house back.
"As strange as everything worked all through that time period, that would be hard to say either way," Graham answered
Business on 07/24/2018