FAYETTEVILLE — Fayetteville real estate investor and developer John David Lindsey used 21 pages to detail his $9.99 million in real and personal property on the Chapter 7 bankruptcy petition he first filed in February.
Chapter 7 bankruptcy allows for liquidation of assets to satisfy outstanding debts. Lindsey filed for individual bankruptcy but marked the debt as primarily business related.
Lindsey filed court documents Tuesday that claim assets of about $9.99 million to offset the $169.6 million in liabilities listed. The total liabilities represent Lindsey’s guarantees against loans for which he may not owe the entire amount. Some listed liabilities were unknown, so final totals may be higher orlower.
He may be able to keep some of his assets after the bankruptcy is resolved.
Federal and state exemptions allow the petitioner to keep some property, such as personal homes, clothing and a vehicle. Other assets, the law states, are turned over to creditors or sold to satisfy as much of the debt as possible.
The remaining debt is“discharged,” or written off, and the petitioner is no longer responsible for it. The primary purpose of bankruptcy, according to the U.S. Courts bankruptcy Web site, is to discharge certain debts to give an honest individual debtor a “fresh start.”
Fayetteville attorney Steven Kay of Showalter & Moore PLC said Friday that exemptions available for those who file Chapter 7 bankruptcies are like a total allowance for shelter, transportation or other necessary items.
“You have so much you can claim in the equity of your house, so much you can claim for clothing, etc.,” Kay said. Those values are based on comparative market values, he said.
Lindsey is the son of real estate developer Jim Lindsey, a past chairman of the Uni-ersity of Arkansas board of trustees and a former Razorback and professional football player.
John David Lindsey listed real property worth about $9.78 million: 63 rental houses, four lots, half interest in two other rental houses, his private home, a home awarded to his ex-wife in a divorce and some property on Salem Road in Fayetteville.
Personal property Lindsey listed include about $18,060 in household goods, $1,000 in clothing, $1,450 in sporting equipment, a 2007 GMC Sierra 2500 HD pickup worth $24,740, a black Labrador retriever valued at $7,500, three Bordino’s restaurant gift cards worth $300 and benefits in four trusts with unknown values.
Three of the trusts are property trusts in eastern Arkansas. Lindsey receives half distribution of the fourth trust, a thirdinterest in a limited partnership, at age 40, according to the filing.
The court may also consider some trusts as salable assets to satisfy debts, Kay said, depending on the timing of the individual’s involvement.
“If someone gets a trust payout between six months to a year after the bankruptcy, the court could consider that,” Kay said. “If it is longer, like six years, anything could happen in that length of time. The trust might not be valuable any longer.” Some of the debts listed in Lindsey’s filing may never be discharged, according to bankruptcy law.
In a Chapter 7 filing, only individuals can be discharged of their debts, the Web sitestated.
Bill Clark, a U.S. bankruptcy trustee in Springdale, said Chapter 7 filings cannot clear business entities of the debts obtained in thebusiness’s name.
University of Arkansas Law School assistant professor Josh Silverstein studies bankruptcy law and how debts are discharged.
“The law states that any artificial entity is not entitled to a discharge,” Silverstein said Friday. “That’s a partnership, or a corporation, or a limited liability company, or anything like that.”
Unless the business entity files for bankruptcy, the debts assumed in its name are not discharged so that any assets that show up at a later time can be sold to help satisfy that debt, Silverstein said.
“So the debt could verywell continue in perpetuity,” he said.
Lindsey invested in residential and commercial real estate and operates dirt excavation and transport services through various companies.
In court documents, Lindsey claims 100 percent ownership in six companies with a total debt of about $75 million: John David Lindsey Development LLC owns rental homes, single-family lots and raw land. J&A Mining LLC owns dirt pit property. JDL Leasing LLC owns equipment used in a trucking operation. Lindsey Contracting LLC was a contracting operation that is now closed. Northwest Arkansas Truck Services LLC is a trucking operation that is now closed. Stephens Red Dirt Farm Inc. operates a dirt pit. Lindsey also has ownership or interest in 24 other companies or partnerships and lists 25 co-debtors on various accounts.
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Business, Pages 23 on 03/20/2010