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Weekly UpdatesBank of America filed for foreclosure last month on Pinnacle Hills West LLC, Bill and Carolyn Schwyhart, and Robert and Frieda Thornton of Rogers.
The suit, filed in Benton County Circuit Court on May 12, claims a mortgage valued at $27.18 million in unpaid principal and accrued interest is secured by more than 64 acres in Rogers.
The land is part of the District at Pinnacle Hills, an 85-acre development south of Pauline Whitaker Parkway that will be anchored by a prototype Wal-Mart Neighborhood Market, which is under construction.
Shirley Norton, spokeswoman for Bank of America, said BOA acquired the loan when it acquired LaSalle Bank of Chicago in 2007. Arvest Bank of Fayetteville is named as a plaintiff because it was a participant lender, she said.
According to the suit, there was unpaid principal of $26.89 million and $293,828 in accrued interest as of April 30. Interest continues to accrue at a rate of $2,427.57 per day, suggesting the bank had not received a payment on the property for about 120 days.
The suit claims Pinnacle Hills is in default of the loan agreement, executed on Dec. 5, 2007, for failure to make interest payments for the months of February, March, April and May of 2009.
The suit also claims Pinnacle Hills West, which is a separate LLC but is part of Schwyhart and Thornton's partnership commonly called Pinnacle Investments, is in default of the loan agreement because partners failed to make a payment of $6.15 million to Bank of America by Dec. 31, 2008.
According to the loan agreement, the amount of the loan available to Pinnacle Hills West was not to exceed 50 percent of the appraised value of the property. In December 2008, the loan exceeded the appraised value by $6.15 million, the suit states.
According to Benton County land records, there are three pieces of land: a 27.26-acre tract that appraised for $10.68 million, a 26.97-acre tract that appraised for $10.57 million and a 10.13-acre tract with a pole barn and home that was built in 1967, which has a combined appraised value of $536,950.
"Despite demand for payment, Pinnacle Hills [West] failed and refused to comply with the payment requirement," the suit states.
The suit also claims that an adverse change in the financial condition of the defendants constitutes an event of default of the loan agreement.
The suit lists active lawsuits that have hurt Schwyhart's and Thornton's financial condition, including suits filed by Sun Trust Equity Finance & Lease, General Electric Capital Corp., Big Horn Lodge Finance LLC and J.B. Hunt LLC, mostly related to the operations and former assets of Aspen-Jetride, an air charter service formerly known as Pinnacle Air.
In a phone conversation with the Northwest Arkansas Business Journal last week, Schwyhart said the partners were "current under the original terms of the loan."
He said the bank changed the terms of the loan due to Pinnacle Investment's involvement with ongoing litigation in several suits related to Jetride.
In February, Schwyhart told the Business Journal he and Thornton had about a 16 percent interest in the Aspen-Jetride deals.
Norton declined to speak about the foreclosure but e-mailed the following statement:
"The borrower is in default. As a result the bank filed the foreclosure.
"We always work with our clients to help them resolve their financial issues and have done so in this case."
Pinnacle Investment was formed in August 2007 by Bill Schwyhart and Robert Thornton when the partners separated from two other partners in the Pinnacle Group, Johnelle Hunt and Tim Graham.
In February, Schwyhart told the Business Journal that he and Thornton had a total debt load of about $100 million secured by performing properties. Pinnacle Investments controls about 224,000 SF of Class A office space in the Pinnacle Hills area of Rogers.
In March, the partners sold the Alltel building at Corporate Park for $4.75 million to Great Southern Bank of Springfield, Mo., one of their creditors. The building had been listed for $6.5 million.
The 28,026-SF building was 90 percent occupied with tenants, including the Pinnacle Dental Group, Chambers Bank and Tomlinson Orthopedic Group.
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