By Emily Ford
eford@salisburypost.com
SALISBURY — Landlord Timothy D. Smith has declared bankruptcy.
Smith’s voluntary Chapter 11 filings prevent Rowan County and Salisbury from continuing to use rent checks from his mobile home parks to pay overdue property taxes and water bills.
Smith was so far behind on his water bill, the city considered turning off the water June 30 at Matika Villa and Circle Drive. Payment from rent checks intercepted by the Rowan County tax office kept the water on.
On July 29 and Aug. 3, Smith filed for bankruptcy protection for three companies:
• Matika Villa LLC, debts of more than $1 million, including $20,942 in property taxes
• Circle Drive LLC, debts of more than $1 million, including $21,122 in water bills
• Tim Smith Enterprises LLC, debt of $86,534 in property taxes
Assets for each company are listed at less than $50,000.
Tenants at the mobile home parks had been sending their rent checks directly to Rowan County to pay down Smith’s tax bill. The county was sharing part of the rent with the city for water bill payment.
L.R. Childers, who owns a mobile home in Circle Drive and rents land from Smith, said he was surprised Smith filed for bankruptcy protection, especially since Smith pays the taxes on his $650,000 house in Spencer.
“He covers his butt, but nobody else’s,” Childers said.
Smith said he could not comment on the bankruptcy filings and directed questions to his attorney, June Showfety. She could not be reached.
Childers said tenants received a letter from the county this week saying the rent attachments paid off his tax bill for Circle Drive and they should resume paying their rent to Smith.
According to court documents, creditors for Circle Drive are the city and previous owners. Smith owes the Jerry Franks family $1.1 million for land he purchased two years ago.
Now that Smith can collect rent again from Circle Drive and Matika Villa, Childers said he’s concerned Smith will “take the money and run like a rabbit.”
Tenants said Smith had assured them for months he was paying the water bill and taxes.
“Nobody around here trusts him as far as we can throw this trailer,” Childers said.
City officials said they hope Smith will do the right thing and pay his upcoming water bills. Rent at the mobile home parks includes water and garbage service.
“Our main concern is for the folks who live out there,” interim City Manager Doug Paris said. “Our concern is finding a solution for keeping the water on.”
Smith’s outstanding water bill — more than $50,000 — joins a long list of debts to be paid as part of his reorganization under Chapter 11.
Since he’s filed for bankruptcy, Smith starts afresh with the city and will receive his first water bill in September, Salisbury-Rowan Utilities Director Jim Behmer said.
“The residents out there really need some stability,” Behmer said.
While Smith is under bankruptcy protection, the city can’t turn off the water to the mobile home parks without permission from the court, City Attorney Rivers Lawther said.
If Smith does not pay his water bill, the city first would ask for a cash deposit before asking the court’s permission to turn off the water, Lawther said.
Although Smith referred questions to Showfety, bankruptcy filings list Concord attorney Edwin Ferguson as Smith’s lawyer. Ferguson was out of the office.
Brian Hayes, a partner in Ferguson’s law firm, said although he’s not familiar with Smith’s case, Chapter 11 reorganization normally would include a plan to pay back a water bill in arrears.
“My presumption would be that every effort would be made to help secure repayment on that debt to facilitate the reorganization and continue the best and highest use of that property,” Hayes said.
Repayment can take up to five years on certain debts, he said.
Formulating a plan can take four to six months, depending on how the bankruptcy was filed and the type of debts, he said.
Filing under Chapter 11 means Smith intends to keep his property and make payments on his debt.
Contact reporter Emily Ford at 704-797-4264.