Barber Denied

Developer Brandon Barber’s request to employ attorney Vaughn Knight in the Chapter 11 bankruptcy of his Lynnkohn LLC was denied by the U.S. Bankruptcy Court, Western District of Arkansas, on Sept. 8.

The decision led to the court’s bankruptcy trustee to file a motion on Sept. 16 to dismiss Barber’s Aug. 20 filing, which temporarily staved off the scheduled Aug. 21 foreclosure sale of his Legacy Building in downtown Fayetteville.

The trustee’s motion to dismiss argues a debtor company cannot represent itself in a bankruptcy proceeding and Barber has made no subsequent request to employ another attorney.

His former law firm, Friday Eldredge & Clark of Fayetteville, is listed as a creditor owed $12,068 in the Chapter 11 filing.

A foreclosure decree was entered on July 23 in favor of Legacy National Bank of Springdale, which loaned Barber’s Lynnkohn $19.4 million to build the seven-story, 37-unit condo building.

The decree found Barber, his wife Keri, and Seth and Laura Kaffka liable for more than $18.7 million in unpaid principle, interest and penalties.

Based on conflict of interest, LNB objected to Barber’s employment of Knight, who is representing Barber in his $10 million lawsuit against LNB and Flake & Kelley Commercial, the marketing firm hired by the court-appointed receiver to manage the property as it moved through foreclosure.

That suit was also filed on Aug. 20, a day before the foreclosure sale, and alleged LNB conspired, with F&K’s assistance, to prevent unit sales that would have reduced Barber’s overall liability.

LNB has also filed a motion to dismiss the bankruptcy case and objected to Barber’s assertion he is the “debtor in possession.” Barber has asked for permission to enter into an agreement with RE/MAX agent Margie Moldenhauer to sell the condos.

LNB argues Barber has neither the means nor the ability to reorganize his business, pointing out it costs $10,000 per month just to keep the building functional. Barber’s original bankruptcy filing noted he had $102.38 in his Lynnkohn checking account at LNB.

A hearing is scheduled for Sept. 26.