Spring into Business

What a world this is, what a coun­try. That’s today’s con­tro­ver­sial opin­ion, based on local news arti­cles and a national item. Those pieces from last week come to mind the morn­ing after mas­sive health-care leg­is­la­tion passed the U.S. House, where oppo­si­tion spanned from prin­ci­pled and rea­son­able to name-calling.

Two North­west Arkansas reporters last week reviewed the doc­u­men­ta­tion filed with the Chap­ter 7 bank­ruptcy request of local devel­oper John David Lind­sey. Each hit dif­fer­ent, telling aspects. The num­ber of bank-owned parcels in the area might nearly dou­ble, and that’s not count­ing the dog.

Lind­sey is, accord­ing to over­all news reports, prin­ci­pal bro­ker and gen­eral man­ager of Lind­sey & Asso­ciates, a real estate invest­ment and man­age­ment com­pany with more than 200 agents, founded in 1973 by his father, Jim Lind­sey, and another man. John David Lind­sey has finan­cial inter­ests in sev­eral other com­pa­nies, includ­ing dirt exca­va­tion and trans­port services.

Lind­sey claims “assets of about $9.99 mil­lion to off­set the $169.6 mil­lion in lia­bil­i­ties listed,” accord­ing to reports.

Thir­teen local banks are among the cred­i­tors of Mr. Lind­sey, one arti­cle (sub­scrip­tion required) from last week said. “They want to take back 226 single-family homes, 410 lots, three mul­ti­fam­ily com­plexes and 227 acres of land. There are sev­eral large com­mer­cial buildings. …

The 226 single-family homes … will nearly dou­ble the amount of bank-owned prop­erty in the region, said Paul Bynum of Mount­data.com,” accord­ing to the arti­cle from North­west Arkansas Newspapers.

The arti­cle con­tin­ues with com­ment from Tom Reed of Streets­mart Data Ser­vices in Fayet­teville: “In the fourth quar­ter, bank-owned homes in sub­di­vi­sions where build­ing is ongo­ing were priced 20 per­cent less than com­pa­ra­ble homes on the [mulit­ple] list­ing service.”

The news hits home, in more ways than one.

While this piece exam­ined the lia­bil­ity side of the ledger, the other arti­cle (sub­scrip­tion required) Sat­ur­day in the sis­ter pub­li­ca­tion, Arkansas Democrat-Gazette North­west Arkansas Edi­tion, looked at the more per­sonal assets of the per­sonal bank­ruptcy filing.

It explains, “Chap­ter 7 bank­ruptcy allows for liq­ui­da­tion of assets to sat­isfy out­stand­ing debts. Lind­sey filed for indi­vid­ual bank­ruptcy but marked the debts as pri­mar­ily business-related.” Lind­sey “may be able to keep some of his assets after the bank­ruptcy is resolved. … 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.’”

It may be inva­sive to repeat the article’s sum­mary. It’s not just kind of like pok­ing around someone’s house, snoop­ing, even though it’s from pub­lic records. Right­fully so: Essen­tially every­one can be seen as respon­si­ble when a per­son or a com­pany declares insol­vency. We’re hit as tax­pay­ers but also as cus­tomers of banks and other busi­nesses. The inter­est we pay on loans sub­si­dizes the other invest­ments. The inter­est we receive in sav­ings accounts can be reduced by the bank’s oblig­a­tions elsewhere.

Besides his own house, the arti­cle also notes $18,060 in house­hold goods, $1,450 in sport­ing equip­ment, a $24,740 GMC pickup and heck, it seemed advis­able for him to list $300 in restau­rant gift cards. The list also has $1,000 in cloth­ing and a black Labrador retriever worth $7,500.

Even from a dis­count menswear shop, men’s busi­ness suits are a cou­ple hun­dred each; a more casual Arkansas busi­ness­man surely owns a dress pair and a work pair of good boots. On the other hand, can we expect a waggy–tailed Lab in a bank lobby greet­ing loan appli­cants and a bank exec­u­tive nearby with a scooper and bags? That’d be the vice pres­i­dent for asset management.

• • •

In other finan­cial news in the last week of win­ter, The Wall Street Jour­nal reported, though with repeated cau­tions, that con­victed invest­ment schemer Bernard Mad­off was beaten up in prison last December.

The Jour­nal is metic­u­lous in sourc­ing. Prison offi­cials and Madoff’s lawyers either denied the beat­ing or gave no-comments; the sources were other pris­on­ers. That the Jour­nal ran the report any­way shows its con­fi­dence in the cons.

Mad­off, 71, was sen­tenced about a year ago to 150 years and is in the medium-security por­tion of a fed­eral prison in North Car­olina. In mid-December, the Jour­nal reported on March 18, he was taken to its med­ical wing with a bro­ken nose, frac­tured ribs and cuts to his head. His reps said he was being treated for blood pres­sure and heart prob­lems. He’s been returned to his unit.

One for­mer inmate “said he chat­ted with the admit­ted Ponzi schemer on Sat­ur­days in the [prison] library and asked for finan­cial advice: ‘He gave me ideas on my index funds.’

Mr. Mad­off advised him to diver­sify, say­ing he should invest in funds that track the S&P 500 index of stocks ‘where my money would be on all the stocks instead of putting my eggs into one bas­ket.’ … ‘I was try­ing to get into day trad­ing and he’s like, “That’s not for you. That’s for indi­vid­u­als like me with mil­lions to spare.“‘”

Mr. 61727–054, whose health care is pro­vided by Uncle Sam, will take your finan­cial ques­tions. Leave a mes­sage. The call will be returned. Collect.

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