It was a handshake that led John Q. Hammons to ultimately bet millions.
Meeting on a steamy July night in the Gateway City with St. Louis Cardinals executives – hoping to secure the team’s Class AA affiliate – Hammons held only preliminary sketches of what would become his namesake Hammons Field.
In the end, “they shook his hand and said, ‘Well, Mr. Hammons, if you build something as nice as this, then we’ll certainly talk about it,’” recalled longtime friend Larry Phillips, who for 25 years contracted commercial architecture work with the hotelier.
“He didn’t have a contract. He didn’t have even a ‘yes, we will do it.’” Phillips said. “It was just, ‘We will think seriously about it.’ And he pulled it off.”
Without a team contract, Hammons financed $32 million to build the baseball stadium. The Springfield Cardinals showed up to play in 2005.
The handshake bet perhaps epitomizes the gusto that made Hammons such a bold developer, but perhaps also the jockeying that might have helped along the demise of his hotel empire.
On Feb. 13, the John Q. Hammons’ bankruptcy estate agreed to a landmark settlement with the hotelier’s largest creditor, J.D. Holdings LLC. Under the terms of the agreement, J.D. Holdings and owner Jonathan Eilian will take over John Q. Hammons Hotels & Resorts’ 35 hotels and myriad other assets, according to court documents filed with the U.S. Bankruptcy Court in Kansas City, Kansas.
The news had Springfield businesspeople reminiscing about Hammons’ development career, which spanned five decades before his 2013 death at the age of 94.
“He was a bigger-than-life figure,” said Tom Carlson, Springfield’s longest-sitting mayor, having served seven terms during Hammons’ reign of development. “I remember him saying to me one time: ‘To be successful, it takes three things. You gotta have a vision, some money and the guts to spend it.’ And he certainly did.”
Hammons developed 210 hotel properties across 40 states, according to bankruptcy filings now spelling out Eilian’s acquisition of nearly 150 of the estate’s assets, including land, business entities and a jet plane.
According to J.D. Holdings’ 87-page disclosure statement, Eilian seeks a $1 billion loan from Goldman Sachs Mortgage Co. to acquire “all or substantially all” of the 35 hotels currently owned by JQH Hotels, including Chateau on the Lake in Branson and University Plaza Hotel & Convention Center in downtown Springfield. Other assets listed include his interests in Harrah’s Casino, the 740-acre Tiffany Greens Golf Club in Kansas City and multiple catering companies.
For those assets, Eilian gets first dibs on Hammons Tower, Hammons Field, Springfield’s U.S. Court House, the Missouri Sports Hall of Fame, Highland Springs Country Club and the home where Hammons lived in Southern Hills. If approved by the court, the compromise between Eilian and Hammons’ bankruptcy estate and its 77 affiliated debtors would end the nearly 2-year-old case.
“It’s kind of a shame,” Phillips said of the bankruptcy and asset sale. “I think, probably, if Mr. Hammons had lived – which, I mean, he would have been, what, 100 by now – it probably would not have happened.”
Now a principal engineer with Buxton Kubik Dodd Design Collective, Phillips said his work started with Hammons in 1979 with the John Q. Hammons Fountains at Missouri State University. He eventually designed Hammons Field and two dozen of Hammons’ hotels.
“He understood how these deals were made and probably would have pulled something out of the hat, I’m sure,” Phillips added.
Eilian in 2005 helped privatize JQH Hotels.
At the time, Eilian’s J.D. Holdings garnered indirect ownership of 43 of Hammons’ hotels, as well as the management of 15 others, according to Springfield Business Journal archives. Hammons, meanwhile, secured a $300 million line of credit from Eilian to develop additional hotels.
The 2005 transaction also installed a right of first refusal for J.D. Holdings, essentially granting Eilian the right to purchase certain assets from debtor Hammons and his affiliates at “80 percent of the price otherwise payable,” with debtor financing, according to court records.
J.D. Holdings first commenced litigation in 2012 in the Delaware Court of Chancery to remedy alleged breaches of the right-of-first-refusal agreement. An ailing Hammons died the next year, on May 26, 2013, with the litigation still pending.
Contested by JQH Hotels, the agreement notably imposed at the latest a 2.5-year deadline after Hammons’ death for the cash sale of debtor assets, according to court filings.
The Delaware Court ultimately confirmed the cash-sale deadline in October 2014.
Twelve months later, J.D. Holdings filed a supplemental complaint, essentially requesting the Delaware Court to uphold the right-of-first-refusal deadline, and thus the sale of Hammons’ assets per the 2005 agreement, all while keeping the 20 percent discount and retaining debtor financing, according to the court records.
By June 2016, however, just one month before proceedings began on J.D. Holdings’ complaint, the Hammons estate filed Chapter 11 bankruptcy, essentially halting the litigation.
Arguing the estate was not at odds with the 2005 agreement, JQH Hotels General Counsel Gregg Groves noted during a resulting news conference that the sale of Hammons’ assets could not happen unless JQH Hotels received some $335 million reportedly owed for the late hotelier’s stock when the company went private.
JQH Hotels CEO Jacquie Dowdy also said during the news conference that the company remained financially stable. The restructuring, she said, sought to keep alive Hammons’ legacy. The ensuing court battle lasted throughout 2017, before this month’s compromise.
Secured or unsecured
Representing Eilian, Kansas City attorney Jonathon Margolies said under the repayment plan of J.D. Holdings, both secured and unsecured creditors would be paid off through the disbursement of the $1 billion loan.
“Largely, the loan is designed to finance the purchase of the assets, the hotel assets that my client is acquiring, and then, of course, the proceeds from that sale will be the source for the payoff of creditors,” Margolies said. “They have to have allowed claims.”
In that respect, he said J.D. Holdings could still reject certain creditor claims “that it thinks are invalid or in the wrong amount, etc., and then those claims wouldn’t get paid until the court adjudicates whether the claims are valid and in what amount.”
The court records indicate there are 4,500 potential creditors and identify only the 40 largest unsecured creditors, spanning from Texas to Florida to Louisiana.
Next, during a scheduled Feb. 28 hearing, Margolies said, Hammons’ bankruptcy estate will essentially join in support of J.D. Holdings’ plans for Hammons’ assets.
Under the plans – for which Hammons’ estate has agreed – J.D. Holdings would establish a $20 million charitable trust to honor Hammons, with $2 million in cash and “all of the debtors’ interest in one or more non-hotel assets designated by J.D. Holdings,” valued at no less than $3 million and free of all liens.
Additionally, J.D. Holdings would contribute to the charitable trust additional non-hotel assets valued at no less than $15 million, also clear of any liens, so long as the “debtor parties” follow several stipulations, notably a requirement to leave J.D. Holdings’ plan uncontested.
A court confirmation hearing has not yet been scheduled, but it would serve as the ultimate endpoint of the bankruptcy case.
J.D. Holdings plans to keep “virtually all” of JQH Hotels’ 4,000 employees, as well as the majority of management on board, according to a company statement provided with the plan settlement. Eilian’s Atrium Hospitality LP will assume management of the hotels.
The plan indicates that J.D. Holdings allows for Dowdy and Groves to resign, rather than termination, though they would remain co-trustees of the existing Revocable Trust of John Q. Hammons.
However, neither Dowdy nor Groves will be appointed as trustees of the new John Q. Hammons Charitable Trust, according to the agreement. It remains unclear who will oversee the new trust.
Interview requests of JQH Hotels representatives were not answered, and a formal media request to the company’s Texas-based public relations firm, WiseHive Public Relations LLC, also went unanswered.
However, in the company statement furnished in the court records, Dowdy said, “This is a historic day as we celebrate coming to a satisfactory agreement with Mr. Eilian to ensure that Mr. Hammons’ legacy can properly live on. I look forward to working with Mr. Eilian on a smooth transition that leverages JQH’s award-winning, performance-oriented qualities.”
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