Unitas' lawyer puts blame for bankruptcy on city Accusation unfair, Baltimore official says


The attorney for John Unitas said yesterday that the city of Baltimore refused to honor a financial guarantee, which resulted in the former Baltimore Colts quarterback having to seek protection under Chapter 11 of the U.S. Bankruptcy Code.

"John was willing to pay all he could pay," said Unitas' attorney, James Wooton. "But the city was saying that wasn't good enough. There should have been some flexibility there."

City officials moved swiftly to discount the claim and added that Mayor Kurt L. Schmoke helped Unitas gain a temporary reprieve from a major creditor.

"I think Mr. Wooton's statement that the city was responsible for this is incorrect and an unfair statement in regards to the city," said Bill Brown, the city's director of finance.

The back-and-forth allegations surfaced after the disclosure that Unitas and his wife, Sandra, had filed for bankruptcy protection Friday. The action came as a result of Unitas' involvement with a failed business venture, National Circuits Inc., a maker of printed circuit boards. A Chapter 11 filing enables an individual or corporation to continue operating while in bankruptcy.

"It was a very personal decision he weighed very heavily before doing," Wooton said. "He was left with only one option. It was not something he did easily. He is a very honorable person who wants to pay his creditors. He has assets and believes he could do it."

In 1984, Unitas and his partners, J. Clark Powers and John Maas, sought help from the city and state to guarantee loans to purchase the Reisterstown-based National Circuits Inc., and relocate it to Seton Business Park. The partnership, named the Maryland Circuit Boards Corp., received a $3.5 million loan from Union Trust, which subsequently merged with Signet Bank.

The Maryland Industrial Development Financing Authority agreed to guarantee $2 million of the $3.5 million loan. Baltimore City provided a guarantee of $1.2 million through the Loan and Guarantee Fund, a group of "trustees" who often backed projects that were difficult to finance. In 1986, the city also made a direct loan of $200,000 to the partnership through the Baltimore Economic Development Corp.

The business failed in 1988 and the bank received proceeds from the sale of plant's assets to Atlantic Electronics Inc. The state of Maryland repaid a portion of the loans, but the city's payment remains outstanding.

Wooton said the city could have helped prevent the bankruptcy filing.

"Had the city paid on its guarantee, then Unitas would in effect owethe city the same amount of money," he said. "Unitas could have made arrangements to repay the city. He offered to do that. He was left with no alternative except to file chapter 11 in order to repay the creditors."

But according to a spokesman, Schmoke intervened one year ago to help Unitas gain extra time to repay the loan to Signet.

"The bank officials granted Mr. Unitas more time," said Schmoke's spokesman, Clint Coleman. "The mayor has dealt directly with Mr. Unitas."

Brown said the city made a "deficiency guarantee" to cover the loan only after the bank exhausted all remedies to collect. Unitas and his partners personally guaranteed the loan.

"The bank was apparently going through the process of exercising its responsibility against its personal guarantee," Brown said. "After it exhausted all of its efforts, it would come to the city and say this is the balance we have not collected from him."

Signet Bank has filed attachments on the Unitas' checking and savings accounts and a lien on their Baldwin home.

"Had he not taken this step, Signet would have caused the house to

be sold and the bank accounts to be liquidated," Wooton said.

The bankruptcy petition, filed in U.S. Bankruptcy Court in Baltimore, does not indicate the couple's assets and liabilities.

Unitas was en route from San Diego to Baltimore last night and could not be reached for comment. The Hall of Fame quarterback who joined the Colts in 1956 and led the team to National Football League titles in the 1958, 1959 and 1970 seasons, retired in 1974.

He was recently involved with an investment team -- led by former Green Bay Packers quarterback Bart Starr -- seeking to lure an NFL expansion team in Baltimore. Phyllis Brotman, a member of the Starr-led group, said the bankruptcy filing will not affect their effort to land an expansion team.

"It doesn't do anything to our group," she said. "He wasn't a financial investor. His role was in marketing. This in no way alters our group or any of our plans."

Wooton said the Unitases hope to quickly repay their debts.

"The bankruptcy stops all the collection activity by Signet," he said. "It gives Mr. Unitas time to prepare a plan to pay off the creditors. We hope the process will be done rapidly."

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