NORTHWEST ARKANSAS — Northwest Arkansas' lengthy real estate slump claimed another high-profile victim when John David Lindsey filed Chapter 7 personal bankruptcy.
The bankruptcy, filed Saturday in Fayetteville in the Western District of Arkansas, did not include income or specific creditor loan amounts. The bankruptcy petition says Lindsey owes between $100 million and $500 million. Lindsey's assets are worth $10 million to $50 million, according to the filing.
The bankruptcy filing only gave an estimate of debts owed to more than 245 local creditors, including 13 banks in Benton and Washington counties and three banks in Crawford and Sebastian counties.
Lindsey, of Fayetteville, blamed his financial woes on the slowdown in real estate activity in Northwest Arkansas, according to an e-mail statement. He wrote that a large portion of his personal business and real estate investments are no longer viable.
"I sincerely regret any harm this situation has caused, including the financial institutions who loaned me money, the vendors who I did business with and especially my former employees and their families," he noted in the e-mail.
Lindsey declined to discuss his particular business ownership interests or how many employees are affected. More details will be included in further court filings within the next couple of weeks. U.S. Bankruptcy Judge Ben Barry ordered John David Lindsey to file schedules outlining secured and unsecured creditors, an income statement and state of financial affairs within two weeks. The court set a creditors' meeting for 11 a.m. March 16.
Companies owned by Jim Lindsey, John David's father, are separate and not affected by the bankruptcy filing, according to an e-mail statement from Jim Lindsey.
"Throughout the worst economic downturn since the Great Depression and unusually high rates of unemployment, Lindsey Management, Lindsey & Associates and Lindsey Construction have added employees and continue to operate with the strength and customer first attitude for which my companies are known," Jim Lindsey said in his e-mail message.
John David Lindsey began downsizing his business interests more than a year ago. He closed Lindsey Contracting, which did dirt work, in December 2008 and 125 people lost their jobs. About 55 workers lost their jobs when Northwest Arkansas Truck, a dirt and gravel hauling company also owned by John David Lindsey, closed in December 2009.
Shirley Ladner, a former controller for several of John David Lindsey's companies, said Monday she received severance pay after Northwest Arkansas Truck closed, but that money is running out, and she expects to file for unemployment.
In addition, Ladner said she and other former employees cannot access their 401(k) plan money because Northwest Arkansas Truck has not filed final closing paperwork with Pension Solutions.
"I personally have $17,000 tied up that I cannot get to," Ladner said.
The Rogers Group has a lawsuit pending against Northwest Arkansas Truck in Washington County Circuit Court. The suit alleges the company owes about $101,000 for crushed limestone. Northwest Arkansas Truck denied the allegations in January.
Lindsey's personal bankruptcy filing likely won't affect the ongoing litigation, said Little Rock attorney J.R. Buzbee, who represents The Rogers Group.
"His filing bankruptcy does not improve the possibility of us getting our money," Buzbee said. The Rogers Group is listed as a creditor in the bankruptcy filing.
Mark Rich said he is owed about $22,000 from John David Lindsey's business, Stephens Red Dirt Farm, which mined from Rich's family farm in Washington County. Rich said he realizes the amount he is owed likely is small potatoes compared with other creditors, but he has signed contracts with John David Lindsey and wants his money.
Jim Lindsey said he loves and supports his son through this unfortunate situation and will be there to help him through this process.
"I have high regard for anyone who has the entrepreneurial spirit to start their own businesses. In John David's case, his businesses were not able to survive the economic downturn Northwest Arkansas and the entire country is currently experiencing," he said.