New filing postpones auction of Legacy site
Posted on Thursday, August 21, 2008
URL: http://www.nwanews.com/adg/News/234883/
The foreclosure sale of a Fayetteville condominium building set for this morning was postponed by the filing of a lawsuit Wednesday claiming fraud against Legacy National Bank and the $ 31. 62 million bankruptcy filing of Brandon Barber’s development group Lynnkohn LLC.
Attorneys for Legacy National Bank of Springdale and Springdale developer Barber and others had reached an outof-court agreement July 23 in a foreclosure action by the bank against The Legacy Building for more than $ 18. 7 million owed in unpaid mortgages.
Lynnkohn LLC, Brandon Barber, Keri Barber, Seth Kaffka and Laura Kaffka, through attorney Vaughn Knight of Fayetteville, filed the suit in Washington County Circuit Court against Legacy National Bank and Flake & Kelley Management Inc., doing business as Flake & Kelley Commercial. Flake & Kelley are the leasing agents for the property.
The suit claims the bank conspired with the leasing company to discourage sales of the condo units, interfering with the contractual relationship of the court’s receiver Wayne Swofford, deceptive trade practices and defrauding Lynnkohn, the guarantors, the court, and Swofford. It seeks more than $ 5 million in actual damages plus punitive damages.
The bank’s attorney, Marshall Ney of the Mitchell, Williams, Selig, Gates & Woodyard partnership, said the lawsuit and its allegations have no merit.
“The combined efforts of the lawsuit and bankruptcy by Barber’s company are nothing more than a desperate attempt to prevent the August 21 st sale of the Legacy Building and resulting deficiency against the Barbers and Kaffkas,” Ney wrote in an e-mail Wednesday.
According to the July consent decree filed in Washington County Circuit Court, Lynnkohn LLC and individual loan guarantors Barber; his wife, Keri Barber; her sister Laura Kaffka; and the sister’s husband, Seth Kaffka, had until Aug. 6 to pay back the mortgage or the seven-story, 37-unit condo would be sold. The mortgage went unpaid, and the sale was set for today. Knight filed the Chapter 11 bankruptcy on behalf of Lynnkohn LLC in U. S. Bankruptcy Court in the Western District of Arkansas in Fayetteville. Chapter 11 of the bankruptcy code allows companies to reorganize their structure and pay creditors over time. Barber declined to comment on Wednesday. A message left with Knight’s office in Fayetteville was not returned. The voluntary petition estimates Lynnkohn, of which Brandon Barber is the sole owner, has between 50 and 99 creditors to which it owes $ 31. 62 million. Its assets are estimated at $ 35. 37 million. The petition lists four Fayetteville properties Lynnkohn owns with a total value of more than $ 25. 36 million. Those properties are 1. 5 acres at Dickson and Block streets, 205 and 207 Church St., The Legacy Building at 401 Watson St., and unsold lots in Sloan Estates subdivision, no address listed. The company has $ 102. 38 in a checking account at Legacy National Bank. It also claims as an asset the $ 10 million it is seeking against the bank and Flake & Kelley Management.
To contact this reporter: sroberts@arkansasonline. com