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The attorney for Bill Schwyhart, a former Northwest Arkansas real estate developer embroiled in a Chapter 7 bankruptcy, is asking the court to dismiss a demand by the bankruptcy trustee that he turn over documents associated with Schwyhart Holdings LLC.

In a filing on Thursday, Fayetteville attorney Travis Story, who has acted as counsel for Schwyhart personally and for several of his entities including Schwyhart Holdings, told the court the documents the trustee wants are protected by attorney-client privilege.

According to the filing, "Because the documents sought by the Trustee are documents relating to Story's representation of an entity which is not the debtor and includes attorney-client privileged documents and attorney work-product, Story respectfully requests that the Court deny the Trustee's Motion."

Earlier this month, the Chapter 7 trustee Scott Seidel asked the court to compel Story to turn over all his files concerning Schwyhart LLC. Seidel argued that as the trustee, he acts as the debtor, and therefore he controls Schwyhart Holdings and can waive any privilege.

In the filing, Story argued that the trustee lacked the authority to waive privilege and that he is not entitled to attorney work product or other attorney-client privileged communications.

In July, Schwyhart and his wife filed for Chapter 7 bankruptcy protection in Texas, claiming more than $90 million in debt. A complaint on the discharge of the bankruptcy made by CHP, an investment group, and unsealed in February contends that Schwyhart and his wife lied about or failed to disclose their ownership in various business entities in order to defraud creditors and hide information about their finances. Later in February, Seidel notified creditors that a special counsel is investigating the Schwyharts' transactions.

In a March filing, the Schwyharts argued that they have done nothing wrong. Their attorney asked that the complaint be dismissed and that their bankruptcy be discharged, saying the couple never intended to hinder, delay or defraud, and that all acts or failures to act outlined in the objection were justified under the circumstances of the case.

In court filings, CHP contends that the Schwyharts shifted assets secured through confidential settlement agreements through "a web" of various entities, and used that money for living expenses and other spending but denied knowledge of them in their bankruptcy filing. CHP also argues that the Schwyharts deceived the court by hiding the fact that they owned an 8,333-square-foot house in the Pinnacle Country Club development in Rogers where they lived for years until recently moving to Texas.

During the Northwest Arkansas building boom, Schwyhart worked with late trucking magnate J.B. Hunt and Tim Graham on the Pinnacle Hills Promenade mall, which opened in 2006. After Hunt's death later that year, his widow, Johnelle Hunt, and Graham broke ties with Schwyhart.

Schwyhart was also one of the investors, along with J.B. Hunt, in the now-defunct charter-jet company Pinnacle Air LLC, which did business as Aspen JetRide and filed for Chapter 7 bankruptcy in early 2009.

Business on 05/25/2019

Print Headline: Lawyer: Papers for LLC private


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