Bankruptcy Didn't Stop Barber From Living the Good Life

by Mark Friedman  on Monday, Dec. 6, 2010 12:00 am  

On the witness stand, Brandon Barber tried to explain how he continued living the good life despite being millions of dollars in debt.

At stake was $30.6 million worth of unsecured claims that the former northwest Arkansas real estate developer owed and was hoping would be discharged in his Chapter 7 bankruptcy proceedings.

In an enlightening two-day hearing in September, attorney Marshall Ney of Rogers, representing creditor Legacy National Bank of Springdale, grilled Barber on inconsistencies like inflated financial statements, wild variations in Barber's claimed income and transactions by a company Barber created months before he filed for bankruptcy in July 2009.  

Ney alleged that Barber, 34, established Nware Investments LLC to funnel money for personal expenses, stays in luxury hotels and even a $2,500 visit to a nightclub while avoiding paying his creditors.

U.S. Bankruptcy Judge Ben Barry agreed. 

"The Court is convinced that during the year prior to the date Barber filed his bankruptcy petition, Barber was actively engaged in transferring and concealing his available money with the intent to delay, hinder, and defraud his creditors," Barry wrote in a 28-page order issued Nov. 9. "After reviewing the record thoroughly, and giving Barber the benefit of every doubt, this Court cannot reasonably conclude otherwise."

Barry denied Barber's discharge, which leaves him on the hook for the unsecured portion of his bankruptcy claim.

Bankruptcy attorney James Dowden of Little Rock, who wasn't involved in Barber's case, told Arkansas Business that a debtor whose discharge is denied "doesn't get the benefits of having his unsecured debts wiped out, so it's as if he never filed bankruptcy."

Those creditors are now free to try to collect their debts through lawsuits or liens. Barber listed only $91,000 in assets, according to a Sept. 11, 2009, bankruptcy filing.

"A lot of times it's difficult for a debtor to make ends meet, much less have funds left over for creditors to seek collection of their judgments," Dowden said.

Ney told Arkansas Business last week that he didn't know what assets Barber had. Barber owes Legacy $9.9 million for unsecured debt tied to failed real estate projects.

Ney said the bank would "commence with collection efforts" if Barber doesn't appeal Barry's decision.

Ney declined to comment when asked if he had made a criminal referral against Barber. It is a federal crime for a debtor to hide assets from the bankruptcy trustee.

 

 

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