LR Developer Clary Facing $17 Million In Defaults; Shackleford Crossings Not in Jeopardy

by Mark Hengel  on Monday, Jun. 15, 2009 12:00 am  

Shackleford Crossings shopping center in west Little Rock is being developed by Steve Clary?s Clary Development Corp. of Little Rock.

The lenders granted eight loans to Clary between May 2007 and August 2008, according to the complaint filed by David B. Vandergriff of Quattlebaum Grooms Tull & Burrow PLLC of Little Rock. After entering a forbearance agreement with Clary in February, the group is attempting to recover its losses and rights to collateral from the original loans and the forbearance agreement.

Clary secured each of the original loans with future proceeds from his stake in Shackleford Holdings LLC, the parent company of Shackleford Crossings LLC. To obtain the forbearance agreement, Clary granted each lender a security interest in a $15 million loan Clary granted to Delphis LP of Little Rock.

Delphis is registered in Texas but lists Clary Development's Rodney Parham Road address as its headquarters, according to the Texas Secretary of State's office.

Clary described Delphis as an account receivable he has that "simply owes me money for transactions in the past." Clary described himself as a minority stakeholder in Delphis, which he said has a variety of interests, but he would not elaborate and nothing more about Delphis is available in court documents.

Although the loans entitle the individual lenders to proceeds from Clary's share of revenue earned by Shackleford Crossings, the lenders will not become active in the development's management, a source close to the lenders said.

Bank Loans

It's unclear why Clary took out nearly $3 million in loans from individuals, but it appears the loans flowed in as Clary began to have money problems and also took on greater debt for projects. (See timeline.)

As the credit markets tightened in the fall, Clary said, many business partners backed out of deals, causing his troubles.

"Many investors backed out of funding agreements starting in September 2008," he said. "I'm not blaming anybody. Since that point in time, we've been in a bit of a scramble to secure additional" capital.

In May 2008, CZ - I-40 Development and BancFirst amended a loan the developer took out to buy about 80 acres near Oklahoma City for a shopping center. CZ - I-40 bought the property in May 2006 for about $13 million and received a $10.2 million loan from BancFirst in the same month, according to documents filed in Canadian County (Okla.) District Court.

Clary defaulted on the amended BancFirst loan July 18, only three months after the two parties finalized the agreement.

Then on July 23, Clary received the $1.35 million loan from Regions, according to court filings. Clary said he received the loan for working capital. Clary defaulted on the Regions loan on Nov. 15, and the bank filed a writ of garnishment against Clary on June 2. Regions has asked that Clary disclose all his assets.



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