Posted 3/12/2012 12:00 am
Updated 9 months ago
Jonesboro developer Bruce Burrow said the Great Recession clobbered his commercial real estate business, leading to a wave of lenders filing foreclosure lawsuits against him.
Since July 2010, Burrow, who helped develop The Mall at Turtle Creek in Jonesboro, has been hit with four judgments totaling $5.5 million. And he still has four foreclosure lawsuits pending where lenders are seeking $3.78 million.
"Let me preface anything I say to you: I take full responsibility," Burrow told Arkansas Business last week. "I've been here 40 years and we've developed lots of property. ... when things turned down, I got caught holding too much vacant ground.
"I simply ran out of cash and didn't have it," the 69-year-old said.
Now Burrow thinks the days of speculating on vacant commercial land are over.
"I don't think anybody in our business ... will get caught holding raw land [again]," he said. "But to buy it and not immediately have a use for it is not something I will do again. Had I done that this go-around, I wouldn't be where I'm at today."
These days, Burrow said, he is working with the banks to sell the pieces of property that are the subject of the foreclosure lawsuits.
He said that he still had more assets than liabilities but declined to say how much.
Burrow said most banks were working with him, but he is in a legal catfight with Iberiabank and has filed a counterclaim against the Lafayette, La., bank for the way it handled the foreclosures against his properties.
Unrelated to the foreclosure lawsuits, Burrow sued his business partner in October over the management of The Mall at Turtle Creek. Burrow's partner, David Hocker of David Hocker & Associates Inc. of Owensboro, Ky., fired back with a countersuit. That case settled last week. (See story, Legal Battle Over Turtle Creek Ends in Settlement.)
These days, Burrow said, the economy in Jonesboro is improving and he is trying to wind down his business dealings and do more traveling.
He said he was optimistic that one day he'll dig himself out of the debts from the lawsuits. "I worked my way into it, and I'll work my way out of it," Burrow said.
Working Way Out
An example of Burrow's efforts to shed debt and property can be found in Iberiabank's lawsuit against Burrow, his Burrow Family Trust and Realty Associates Brokerage Inc.
In July 2010, Iberiabank sued in Craighead County Circuit Court in an attempt to recover $2.1 million in defaulted loans. Burrow said in response that he had signed an agreement to make the payments just two months earlier and had promptly paid $600,000.
But that wasn't enough.
Burrow admitted that he defaulted, but he was provoked because in the meantime Iberiabank wanted him to pay $10,000 to "cover a one-time waiver of the ... ‘defaults,'" he said in his countersuit.
Burrow's filing describes the fee as "nothing less than a predatory lending attempt at a white-collar shakedown." It was, his countersuit says, "a blatant effort to exploit Burrow's current liquidity problems in the midst of the most severe economic crisis since the Great Depression in order to further ‘pad' [Iberiabank's] quarterly earnings for the financial quarter ending June 30."
Burrow is countersuing for breach of contract and is seeking an unspecified amount of money for damages. The case remains open.
Iberiabank's attorney, Harry Hurst Jr. of Jonesboro, didn't return a call for comment last week.
Burrow said it didn't help his financial situation that he had triple heart bypass surgery in August 2010 and spent nine months recovering.
In the meantime, seven more banks followed Iberiabank's lead by suing Burrow.
The Focus Bank in Charleston, Mo., has received $2.97 million, which is the largest judgment against Burrow so far. It received the judgment on Jan. 17 for a 2008 loan that Burrow defaulted on. Focus also named as a defendant WHB LLC, which is also known as Burrow Halsey Holdings LLC.
In February, the bank recovered nearly 30 acres of undeveloped land in Jonesboro as a result of the default judgment.
Burrow said last week that he was working with the other banks to sell his property, and he said that there was no one better to sell it than he.
"I'm the one that has the heart, soul and blood in it and knows pretty much what to do," Burrow said. "Running out of liquidity doesn't make you all of a sudden go from a genius to a dummy."