Update March 19, 2009: First Horizon Home Loan Corp, Division of First Tennessee Bank, NA, has filed a Complaint against Kathy and John Cox to except First Horizon’s debt from discharge, and to deny the Cox’ general discharge. First Horizon alleges they were provided false and fraudulent financial statements by the debtors. See First Horizon Home Loan Corp. v. John Cox and Kathryn Cox, Adv. No. 09-1018 (click here for complaint).
Just two months after she won, and gave away, $1 million dollars from the TV game show Are You Smarter Than A Fifth Grader (click here), Georgia School Superintendent Kathy Cox and her husband filed a Chapter 7 Bankruptcy petition in the Newnan Division of the Northern District of Georgia. In re John Hamilton Cox, Jr. and Kathryn Burgess Cox, Ch. 7 Case No. 08-13461-WHD (filed November 17, 2008). Click here for the Petition and Schedules.
The schedules reflect $2,871,923.54 in unsecured debt and $644,630 in secured debt. Notably, there is no mention of the game show winnings in the Statement of Financial Affairs (specifically, question no. 7, gifts and charitable contributions), so it could very well be that Cox did not actually win the money for herself, then give it away, but instead the money was earmarked for the charities from the beginning. Certainly, the Chapter 7 Trustee will review the issue.
See Atlanta Journal story here.
The story is also in the Athens Banner-Herald including a statement by Cox:
On November 17, after consultation with numerous attorneys, my husband and I made the difficult decision to file for bankruptcy due to losses incurred by his home building business," State Schools Superintendent Kathy Cox said in a statement issued Friday by her office. "The collapse of the home building market has been well documented and small builders, like my husband, have been hit especially hard. This was a gut-wrenching decision, but in the end, we felt that we had no choice." … "It also does not, in any way, deter my commitment to the citizens of Georgia that we will provide the best education possible to this state’s 1.7 million public school students. … We know that thousands of families throughout Georgia are struggling in these difficult economic times. But we all must remain committed to the future of Georgia – our children," Cox said.
As far as the disposition of the winnings, and the question of whether a Trustee’s avoidance powers come into play, Cox discussed this in an interview with Special Ed Advocate:
6) I understand that you are going to donate your winnings to the state school system.
Q. Any idea as to exactly how the money will be spent?
I am setting up a foundation where the money will be housed and will be spent on our three state schools that the state of Georgia directly oversees (Georgia Academy for the Blind, Georgia School for the Deaf and the Atlanta Area School for the Deaf.)Because they don’t have a local school system of their own, I want to ensure that these students have the same experience that all other students around the state have.Since they have visual and hearing impairments, it costs more for them to participate in extracurricular activities, so I want to help provide what they need so they can.And, most importantly, I was to give a scholarship or incentive for these students to go for their regular high school diploma.