Appeal in way of discharge request

Bankruptcy-casejudge files order

A bankruptcy judge filed an order Friday denying a request for discharge in the bankruptcy of a former Northwest Arkansas developer and his wife because a creditor's appeal in the case has not been resolved.

Bill and Carolyn Schwyhart filed for Chapter 7 bankruptcy protection in Texas in July 2018, claiming more than $80 million in debt, mostly related to business.

A discharge in a bankruptcy filing, with a few exceptions, effectively extinguishes the debtor's obligations, giving the debtor a fresh start.

In an order filed Friday, Judge Harlin Hale of the U.S. Bankruptcy Court for the Northern District of Texas, said he wouldn't grant the discharge request since the matter could not be finally adjudicated because there is an ongoing appeal by creditor CHP LLC. Hale noted if an appeal is filed properly, the entry of a discharge order while the appeal is pending would materially alter the status quo.

In late August, attorneys for the Schwyharts asked the court for discharge, contending the couple had "fully performed and complied with all obligations of Chapter 7 debtors and are entitled to a discharge."

A hearing on the request for discharge was held in late September where Hale asked attorneys representing creditor CHP LLC, and attorneys representing the Schwyharts, to present letter briefs to the court addressing its jurisdiction in the matter.

In late July, after a three-day trial, Hale denied CHP's initial move to block the discharge of the bankruptcy, saying CHP failed to prove the couple tried to defraud their creditors. In August, CHP appealed Hale's decision.

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.

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. It filed for Chapter 7 bankruptcy protection in early 2009.

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