In a lawsuit filed April 26, Rogers Funding LLC claims John Q. Hammons Hotels & Resorts CEO Jacquie Dowdy inflated founder John Q. Hammons’ and his trust’s net worth by $1 billion when refinancing a loan for a hotel and convention center in Rogers, Ark.
According to New York Supreme Court records, in May 2007, JQH-Rogers Convention Center Development LLC borrowed $80 million from Barclays Capital Real Estate Inc. to refinance the loan to build the John Q. Hammons Center and adjacent Embassy Suites Northwest Arkansas. Rogers Funding purchased the loan from Barclays in late 2009, and in the guaranty of payment on that loan, John Q. Hammons trustee Dowdy signed off that the net worth of Hammons’ revocable trust was $1.3 billion as of Dec. 31, 2010.
Rogers Funding claims the net worth and assets are less than $400 million – a threshold in the refinancing agreement that if crossed would trigger a loan default.
The financial statement provided to Rogers Funding valued Hammons’ trusts assets at $2.8 billion against liabilities of $1.45 billion, but it does not take into account “hundreds of millions of dollars” in taxes and charitable pledges, according to the suit.
Two months of written letters seeking revised financial statements ended April 10, when Rogers Funding sent a notice seeking payment of the outstanding loan principal, according to court records. The suit said the loan has not since been paid in full.
Hammons’ counsel contends his trust’s net worth remains above the $400 million minimum, and in a prepared statement, officials called the allegations baseless.
“The company will establish in court the borrower is not in technical default and there is no basis for the complaint,” the statement reads. “The borrower has made all payments due under the loan documents on a timely basis.
“The lawsuit will have no impact on the operations of the underlying hotel or John Q. Hammons Hotels, and the borrower will continue to make its loan payments in a timely manner.”
The 21-page suit names Hammons, his trust, trustees Dowdy and John Slaboch, and JQH-Rogers Convention Center Development. Dowdy also serves as Hammons’ durable power of attorney.
Scottsdale, Ariz.-based Rogers Funding is led by principal Jonathan Eilian, who in 2005 orchestrated a minority shareholder buyout of $132 million of John Q. Hammons Hotels Inc. stock. The Eilian-led Atrium Group buyout of majority shareholder Hammons effectively privatized the company.
Eilian is a private investor who helped start Starwood Hotel and Resorts Worldwide.
This installment of Springfield Business Journal’s Architects & Engineers Project Report showcases 26 endeavors by area design and engineering professionals.
