Proposed settlement calls for schools, creditors to split Kathy Cox's $1 million prize

A legal tug of war over the prize winnings has been going on for more than a year in the Chapter 7 bankruptcy case filed by Cox and her husband, John Cox, a home builder.

On Wednesday, Kathy Cox said she was angered by the agreement.

"I'm happy that the schools will get $500,000, don't get me wrong on that," she said in a telephone interview. "But all of it should have gone to the schools."

In August 2008, Cox appeared on the game show "Are You Smarter than a 5th Grader?" and aced it, correctly answering all 11 questions and winning the $1 million prize. Cox had said that if she won she would give her winnings to the Georgia Academy for the Blind in Macon, the Georgia School for the Deaf in Cave Spring and the Atlanta Area School for the Deaf in Clarkston.

All three schools, while state-run, do not rely on local funding. Cox said she wanted the money to help build nest eggs for scholarships.

Two months after the game show appearance, the Coxes filed for bankruptcy protection, citing more than $3.5 million in liabilities and less than $650,000 in assets. Last year, Gary W. Brown, the Chapter 7 trustee, filed suit seeking to claim the $1 million for the Coxes' creditors. The suit said that Cox, acting on her own and not as school superintendent, executed a document allowing her prize winnings to be transferred to a charitable gift fund.

Since February, the money has been deposited in the registry of the U.S. Bankruptcy Court. The proposed settlement must ultimately be approved by U.S. Bankruptcy Judge W. Homer Drake in Newnan. All parties and creditors in the case had to file a response to the court by Wednesday if they had an objection.

Brown, the trustee, said an Oct. 8 hearing has been set to consider the proposed settlement.

"I think it is a satisfactory resolution and hope it will provide meaningful distribution to the creditors and satisfaction to other interested parties," he said.

Kathy Cox said she is not a satisfied party.

"It actually makes me angry," said Cox, who is now chief executive officer of the U.S. Education Delivery Institute, a Washington think tank.

"If anybody had watched the show, it was so clear I was there as the state school superintendent," she said. "That money had nothing to do with what was happening to us personally."

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