2009 Bankruptcies Illustrate Barber Group's Slow Decline

by Susannah Patton  on Monday, Sep. 7, 2009 12:00 am  

The fairy-tale story of The Barber Group ends at Chapter 7.

Two freewheeling young developers married to daughters of privilege sought to change the landscape of northwest Arkansas with talk of upscale multistoried and multimillion-dollar projects. But over-leverage and under-performance meant their stardom was little more than a brilliant flash.

Now at least one of them has said that he has undergone a "stressful exercise of humility."

The Legacy Building in Fayetteville - the company's premier development and its only completed large-scale project - is perhaps the most prominent symbol of its rise and fall. Now all four of the original guarantors on the building's $16.7 million mortgage - Brandon L. Barber and his estranged wife, Keri E. Barber; and Seth K. Kaffka and his ex-wife, Laura P. Chambers - have filed for Chapter 7 bankruptcy, three of them within a week of each other in May. Brandon and Keri Barber's divorce is pending in Washington County while they settle custody and financial issues.

Keri Barber and Laura Chambers are sisters and daughters of Chambers Bancshares Inc. Chairman John Ed Chambers III. Brandon Barber and Seth Kaffka are high school buddies from Jonesboro. At least two of the four have resorted to paying lawyers with jewelry.

Brandon Barber was the last to file his personal bankruptcy, on July 31. He claimed nearly $48 million in liabilities but has so far successfully hidden a true picture of his personal finances. On Aug. 28 and Aug. 31, he filed motions to extend the deadline for his schedules and statements until Sept. 14.

In the deficient schedules and statements, which are typically due 15 days after the bankruptcy petition is filed, Barber will be required to list his real and personal property as well as any income, transfers of property and losses. Each secured creditor in the bankruptcy filing will be connected with a particular piece of collateral and its value.

Barber's claim of "no assets" on his initial filing drew widespread skepticism. But Jim Dowden, a bankruptcy attorney in Little Rock, said it was not uncommon for a developer to file a bankruptcy petition with no assets listed.

Such an action usually means the developer has so many limited liability companies attached to his name that he can't afford to file bankruptcy for himself and each LLC, Dowden said. In those circumstances, the developer files for personal bankruptcy and lumps all of the liabilities associated with the various LLCs into one filing.

Such a filing may not show any assets, Dowden said, because the assets are tied to the businesses and not the individual.

In August 2008, Barber filed for Chapter 11 bankruptcy reorganization under his Lynnkohn LLC, listing $25.4 million in property assets. Of that amount, $18.1 million was tied to the Legacy Building.

The building has since been sold in foreclosure for $11.25 million to Legacy National Bank of Springdale, the primary lender on the mortgage.

"I'm obviously disappointed and sincerely remorseful and humbled by the sheer size of the projects that have failed," Barber wrote in an e-mailed response to questions from Northwest Arkansas Business Journal. "I'm optimistic that the most significant projects in Fayetteville, both the Legacy Building and Bellafont, will be successful for someone else in the future when the market turns around because of their location alone."

 

 

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