A creditor of former Northwest Arkansas real estate developer Bill Schwyhart is appealing a bankruptcy judge's recent decision to move ahead with the discharge of his debts.
On Thursday, CHP LLC, a creditor of Schwyhart and his wife, Carolyn, filed a notice of appeal of the ruling of Judge Harlin Hale of the U.S. Bankruptcy Court for the Northern District of Texas and all other adverse rulings in the matter, according to court documents. In late July, Hale denied CHP's move to block the discharge of the bankruptcy, saying CHP failed to prove the couple tried to defraud their creditors.
A discharge in a bankruptcy filing, with a few exceptions, effectively extinguishes the debtor's obligations, giving the debtor a fresh start. If the discharge is denied, creditors are allowed to pursue the debtor on pre-bankruptcy claims.
The Schwyharts filed for Chapter 7 bankruptcy protection in Texas in July 2018, claiming more than $80 million in debt, mostly related to business.
"At trial, the Debtors appeared to be honest people. They made a number of mistakes, but they seemed honest. And the Debtors' mistakes will not materially alter the outcome for creditors in this bankruptcy case," Hale wrote in his ruling.
Hale said CHP failed to prove the couple used a sophisticated, multiyear plan to defraud and hide assets from creditors and the court, as it alleged. He said the couple did make some missteps and even made false statements, but they appeared to be honest mistakes.
In late June, Bill and Carolyn Schwyhart took the stand in their own defense in a Dallas bankruptcy court, contending they never intended to deceive their creditors, and that they had used corporate entities for years to pay their bills and other living expenses. Bill Schwyhart also testified that he had stage four cancer and that the couple moved to Dallas in March 2018 to be closer to his doctors and not to avoid CHP.
During the Northwest Arkansas building boom, Bill Schwyhart worked with 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.
Later, Johnelle Hunt and Graham sued Schwyhart, claiming that he had defaulted on various loans. In April 2010, eight development companies managed by Schwyhart filed for bankruptcy, claiming nearly $42 million in debt.
Schwyhart also was 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. Billionaire John P. Calamos of Naperville, Ill., chairman of financial company Calamos Asset Management, became a partner with Schwyhart when Calamos' Ajax merged with Pinnacle Air. Aspen JetRide filed for Chapter 7 bankruptcy protection in early 2009.