1) Only Larry sleeps under that tree. - a standard word order
The right way to rebuild this sentence using the inversion would be
2) Under that tree sleeps only Larry.
Now I wonder whether this one is also acceptable?
3) Under that tree only Larry sleeps.
Is 3 also an acceptable inversion or is it wrong?
(1) is the most common word order.
(2) is comprehensible, but clumsy.
(3) is an improvement on (2).
Note that there is a context for (2), however, in a narrative register often seen in stories:
In that castle lived an evil king.
On that day began an adventure that would take him to the ends of the earth.
