Athletic Club Owners to Fight Foreclosure

The owners of Fayetteville Athletic Club, served with foreclosure papers on Feb. 25, have become collateral damage in the failure of ANB Financial.

Robert and Katherine Shoulders had three loans totaling just under $10 million with ANB, the Bentonville bank that was taken into receivership by the Federal Deposit Insurance Corp. last May.

The Shoulderses said they offered the FDIC about $6.5 million for the loans — about 70 cents on the dollar — but the bid was rejected on Sept. 19. Instead, the Shoulders’ loans, along with many others from ANB, were bundled and sold through a closed auction process.

A Florida investment company called SM-WLJ Asset Owner LLC bought the Shoulderses’ loans for $3.4 million on Oct. 28. SM-WLJ then called principal and interest on all three notes on Jan. 20 and that the Shoulders are in default; as of Feb. 18, the total due was $11.16 million.

They made payments to the FDIC through part of the summer, then were advised to stop, they said. The loan was sold as a non-performing loan.

In mid-February, according to Robert Shoulders, he offered SM-WLJ about $5 million for the notes — a return to the investors of about 47 percent in four months. Shoulders said he and Katherine had financing for that amount in place with Liberty Bank of Arkansas. The Shoulderses said they can’t get financing above that due to the credit markets.

SM-WLJ’s response was to filed the foreclosure suit on Feb. 25.

One recent morning the Shoulderses looked out over the Fayetteville Athletic Club parking lot, which was full, and could only shake their heads in disbelief. They started the business 13 years ago and they intend to fight for it through any legal means available.

Their profit in 2008 was almost dollar for dollar even with 2007, they said. Though memberships were down, their back office efficiencies were tightened during 2008 and revenue-producing services were up slightly.

The club, which employs about 160 full- and part-timers, is frequently mentioned as a networking spot, a place to be seen for northwest Arkansas’ business leaders. The couple said they’re sure FAC will remain open and part of the community they love; they just hope they’re still the owners when the dust settles.