Jackson, Miss.-based Trustmark is seeking millions from former physician investors in the failed e-Fitness & Wellness Center in North Biloxi, La., due to unpaid personal loan guaranties, according to a Sun Herald report.
Here are five things to know:
1. The fitness and wellness center was designed as a facility to combat obesity beyond the physician's office with a gym, salon, café and guidance for diet and exercise. Investors bought in at $75,000 per share, but the project opened up behind schedule in 2007 and was over budget. In July 2008, Trustmark provided permanent financing for the facility, at which point investors signed loan guaranties.
2. The Trustmark loans secured financing for the fitness and wellness facility, which the bank now owns and is trying to sell for $5.5 million. Most of the physicians who signed the loan guarantees were able to buy their way out of the $13.4 million commitment before the center failed, but the bank has now sued five physicians who didn't participate in the buyout.
3. All five of the physicians report facing "financial devastation" as a result of the payments, and four say they aren't able to pay; one individual, an internal medicine physician, has already filed for bankruptcy as a result. The five physicians owe a combined $2 million on loan guarantees, which originally totaled under $1.8 million. A judge in the Circuit Court has ordered the investors to pay the amount pledged as well as interest on the loans and attorneys' fees.
4. There is a hearing set for early 2018 on Trustmark's request to collect the money from each individual's practices and other businesses, however the bank already seized their personal and business accounts. The five affected individuals now are trying to pay bills and avoid overdraft charges on automatic withdrawals, and Trustmark is already garnishing the wage of one physician, an employee of his business, at 25 percent.
5. Trustmark negotiated buyouts with several investors to free them from the personal guaranties, but four of the investors were unable to participate at the time and one said he never received the buyout offer.