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Comeback or crash landing?: Bob Stroud fights to save his North Oaks Special Events Center in North Little Rock.

Things appeared to be looking up for North Little Rock businessman Bob Stroud in late March.

Stroud twice averted losing his North Oaks special events center through court-ordered foreclosure sales during a two-week period.

He scrambled to come up with two lump-sum payments totaling $144,400 to keep creditors from taking over the $1.3 million North Little Rock development. That money almost paid off six subcontractors who helped build the 35,000-SF project on Crystal Hill Road.

A $45,000 loan from state Sen. Cliff Hoofman of North Little Rock and North Little Rock Mayor Patrick Hays played a role in saving Stroud.

"There was a time when I thought I would lose it all -- a dream I've had for 18 years," says Stroud, who in 1985 was president of the North Little Rock Chamber of Commerce. "I'm not out of the woods yet, but I'm more optimistic now than I've had a right to be."

North Oaks is adjacent to Interstate 40 and Interstate 430 with parking for more than 700 vehicles.

North Oaks' advertising describes the special events center as having "a country-club atmosphere, outstanding cuisine, a professionally trained staff and exciting ideas for creating and presenting expertly organized events."

Stroud survived a harrowing March only to confront a new crisis in April.

Stroud Service Co. of North Little Rock, the fire-restoration business that served as the cash cow for the 6.74-acre North Oaks project, was hit with a $454,429 tax lien by the Internal Revenue Service. That includes interest and penalties for not filing corporate tax returns for 1989 and 1990.

Even this problem might not be insurmountable. If Stroud can come up with several thousand dollars more, he will have the subcontractors paid off. That could pave the way for Stroud to secure a conventional loan, repay the remaining debt on North Oaks and clear up the tax problems his company is experiencing.

In January, Stroud took out a $498,530 second mortgage with Stroud Service Co.

Real estate records indicate that North Oaks also is tied to a $50,000 mortgage that dates back to July 1987 with Twin City Bank of North Little Rock.

A spokeswoman for the bank says otherwise.

"I can confirm that we're not involved with that piece of business in any way," says TCB Vice President Susan Blair.

The chance still exists that Stroud could lose his company and North Oaks if he can't find a loan. The IRS could seize Stroud Service Co. if efforts to collect back taxes are fruitless. The federal government then could gain control of the company's second mortgage on North Oaks.

"This is the most challenging time in my life," says Stroud, who also is going through divorce proceedings.

Cruel Turn Of Events

Stroud had thought his financial problems were solved when a woman said to be named Velma Magoon made a $1 million loan commitment in March.

But the mystery woman left him standing at the altar.

Following a breakfast meeting to work out the final details, Magoon didn't rendezvous as promised at her attorney's office.

Little else is known about the woman, and Stroud won't talk.

Reports vary on whether Stroud tried to obtain a loan to develop North Oaks before breaking ground in November 1989 or was determined to finance the project out of his pocket and the cash flow of Stroud Service Co.

"He was in such a hurry to start it that he didn't seek construction financing," one source says.

Stroud reportedly couldn't -- or wouldn't -- borrow against Stroud Service Co.

And he wouldn't bring in outside investors.

Once Stroud began the project, no lender would come on board since any loan would be subordinate to the subcontractors. Lenders face the ire of regulators when they don't take first-mortgage positions on new projects.

"He didn't show good business sense," says one lender. "... That doesn't build confidence for helping him dig a deeper hole."

More Bitter Fruit

Stroud had hoped to devote full time to North Oaks after selling 90 percent of Stroud Service Co. to his brother, Ken, and a longtime manager, Gene Kordsmeier.

According to an August 1990 announcement, the sale would be completed following a five-year pay out. However, the deal fell apart last fall when Stroud reduced the size of the company's staff and fired his brother and Kordsmeier.

"I've taken the bitter stinger out and moved on with my life," Ken Stroud says.

He soon will start a new career in institutional bond sales with the Little Rock office of Shearson Lehman Brothers Inc.

Kordsmeier now operates the Springdale office of Stroud Service Co. as part of a reported settlement.

The final chapter in the story isn't written.

For now, though, a happy ending isn't in sight.
COPYRIGHT 1992 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Waldon, George
Publication:Arkansas Business
Date:May 18, 1992
Words:794
Previous Article:The sultan of taxes.
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