No creditors object to Cynthia Smiley bankruptcy discharge

by The City Wire staff ([email protected]) 345 views 

Cynthia and Dennis Smiley were in bankruptcy court on Tuesday (Nov. 25) to face creditors in a routine meeting ahead of a discharge hearing. Craig Campbell, counsel for Arvest Bank, which is at the center of the Dennis Smiley fraud allegations, was the only creditor to attend the meeting in federal court held in Fayetteville.

Former Arvest banker Dennis Smiley has not filed bankruptcy but he was there in support of his wife, Cynthia, who filed Chapter 7 bankruptcy last month. She is seeking to discharge $2.29 million in debts that are deemed business related. 

Dennis Smiley was forced to retire as president of Arvest Bank-Benton County in March when loan fraud was discovered. Smiley reportedly borrowed an estimated $4.5 million from more than a dozen Arkansas banks dating back to 2009, according to Uniform Commercial Code filings with Arkansas Security of State.

Campbell asked Smiley if she had any recollection of signing over stock certificates for 682 shares of stock in First State Bank of DeQueen as collateral on a $215,000 loan made to her business, Design for the Home. He showed her the certificate of stock to which he was referring. Smiley said she had not seen that certificate before. He said she signed documents pledging that stock against the loan made by Arvest. 

Smiley replied that she has no memory of it, but she could have signed documents. Campbell asked her if she had any jewelry in the couple’s lock box or anything of value. 

“I’ve never looked in that lock box so I don’t know what’s in there,” Smiley said.

Smiley’s lawyer, Jill Jacoway, told the court that she would let them know if there were any valuable jewelry found in the box. 

Dennis Smiley declined to speak at the creditors’ meeting as he was advised not to by the court trustee. The trustee questioned Smiley about Dennis’ Arvest Bank retirement stock which was pledged for collateral to at least 18 banks across the state.

“You are beneficiary on this retirement bank stock plan, but I understand the asset(roughly $500,000) has been pledged to Benton County Court for debts there. Is that right?,” the trustee asked her.

Smiley agreed. 

The trustee concluded that her right to the pledged funds in her husband’s account is only relevant upon Dennis Smiley’s death. Unless he dies before April 19, 2015 the court has no right to these funds. (April 19, is the slated charge-off date for Smiley’s bankruptcy.) She agreed with that assessment. 

The trustee asked Smiley about her employment status. Smiley said she has continued her design consultant work on a contract basis and is doing that out of her home. She also answered that she did not have any interest in any other stocks or securities not already disclosed to the court.

The trustee said he concludes that Smiley’s bankruptcy is a minimal asset case given that he could only get about $2,600 which is merely pennies against the $2.9 million posted in debts. He then approved the Chapter 7 bankruptcy and concluded the case.

Campbell said he would refile the Arvest case against other debtor (Dennis Smiley) at a later date. 

Creditors wishing to dispute the dischargeabiity of Smiley’s bankruptcy have until Jan. 26 to file with the court.

Civil lawsuits that named Cynthia Smiley as co-defendant were recently closed because of the bankruptcy order filed by Jacoway. As previously stated, Arvest plans to refile its cases 04-CIV-2014-1185-2 where it’s owed $181,782 for a loan made to Dennis and Cynthia Smiley. Case 04-CIV-2014-1135 involves two outstanding loans ($31,103) and ($50,614) made to Dennis and Cynthia Smiley for Design for the Home business.

Other cases closed in Benton County per the bankruptcy order include:
• First State Bank 04-CIV-2014-0522 against Dennis and Cynthia Smiley and Design for  the Home. This case claims debts owed of ($40,450) ($80,298) and ($38,336).

• Community First Bank of Harrison 04-CIV-2014-1288 against Dennis and Cynthia Smiley and Design for the Home. This creditor claims outstanding balances ($67,650) ($28,199) ($11,613) at the time of the filing. 

The orders closing these cases indicated the creditor can reopen and file against the other debtor in the future.

Other civil cases against Dennis Smiley have been slated for trials in 2015.
• Arvest versus Smiley Revocable Trust is seeking $311,700 from four outstanding loans. Trial is set for Aug. 17-18, 2015. 

• First Federal Bank versus HDS Holdings, is seeking $20,000. This trial date is slated for Sept. 3-4, 2015.

• First National Bank Fort Smith versus Dennis Smiley is seeking $194,258 in payment or judgment. That trail date is Aug. 24-25, 2015.

• Delta Trust & Bank (Now Simmons First National) is suing Smiley and his father Henry D. Smiley Sr. for $245,126. That trial date is slated for Aug. 3-4, 2015.