You try to block, but Lars does a crazy-looking swirling action with his sword. You are further distracted by a Zena-esque sound he makes as he does so. Unfortunately, you are struck in the chest because you were too distracted to defend yourself.
Bors did not make a call against such a dishonorable action, so you lose. You fall to the ground to show you are dead. Don't worry about your loss. If the only way a person can defeat you is by using dishonor and cheating methods, then you haven't truly lost. After all, this was a private fight. Imagine how well you will do in a tourney, and how poorly the dishonorable Lars will do since those tactics are not allowed.