A group of companies owned by Eureka-based (or is he anymore?) businessman Rob Arkley owes a whole lot of money to Bank of America, among other lenders, and BofA is evidently tired of waiting to collect.

The Arkley-owned companies declared bankruptcy more than two and a half years ago, and after countless negotiations, delays and defaults, Bank of America is trying to foreclose on the debt by filing a “cramdown“-style reorganization plan in bankruptcy court. The plan would seize ownership from Arkley and give it to the bank and its fellow senior lenders.

Bank of America, acting as the agent for a group of lenders who say they’re owed more than $170 million, filed the reorganization plan last month in the ongoing bankruptcy case of Security National Properties Funding III, LLC, and its affiliates. 

Here’s a little background:

In October 2006, 10 of the hundred-plus entities in Arkley’s corporate stable took out a $200 million line of revolving credit from multiple lenders, the largest being Bank of America. Together, these Arkley-owned limited liability corporations (LLCs) own and manage 33 commercial real estate properties — office buildings, shopping malls, industrial sites, trailer parks, etc. — spread across 15 states.

In hindsight, this large loan came at a bad time, since 2006 is about when the national housing bubble reached its zenith. The subsequent decline nearly destroyed the global economic system, and it made commercial real estate a lot less profitable.

The Arkley companies failed to repay the debt by the original due date of October 31, 2009, but they managed to renegotiate the terms of the loan several times, including a two-year extension that expired in January 2012, with the debt still unpaid.

In October 2011, Arkley’s LLCs filed for Chapter 11 bankruptcy “without advance notice to Bank of America,” the bank claims, “in order to attempt to thwart a sale of the note by Bank of America.”

Things have been tense and courtroom-y ever since. (There’s more background here.)

Last August, Bank of America and the other senior lenders reportedly reached an agreement with Security National to resolve the bankruptcy, but the deal required the various Security National-owned properties to bring in more money than they actually did. And so, after a “protracted course of still unsuccessful attempts” at a resolution, Bank of America came up with a plan to get its money back.

In broad strokes, the plan (which is subject to approval by both the bankruptcy court and the senior lenders) is similar to foreclosing on a home loan, only instead of taking over a house, BofA and the other senior lenders want to take over the 33 commercial properties, effectively obliterating the companies that now own them. 

The bank claims that those properties are underwater: “The amount of post-petition interest and fees due … greatly exceeds the value of the properties,” it says in a declaration to the court.

BofA and Arkley (or his lawyers, more likely) formerly agreed that the properties were worth $171,465,000. If the reorganization plan goes through, the senior lenders would take over all equity interest in the properties, leaving these particular Arkley LLCs with nothing.

(If you’re a glutton for punishment or have some weird affinity for impenetrable legalese, here’s is the entire 74-page declaration and the 47-page reorganization plan. Go nuts.)

Of course, since those LLCs are merely empty business structures, with no employees or offices of their own, the whole process might not seem like a big deal. But if the plan is approved, the result would represent a $170 million loss for a company that already seems to have fallen on hard times. Security National Master Holding Company recently moved its headquarters from Eureka to Baton Rouge, La.; Arkley himself has reportedly had to offload such luxury assets as his corporate jets; plans for the long-delayed Marina Center appear to be on indefinite hold; and we recently learned that Randy Gans, Arkley’s longtime right-hand man and vice president of Security National Servicing Corporation, is no longer employed with the company. (A call to Gans was not returned.)

The Outpost left a message for Security National Vice President for Real Estate Development Mike Casey. We’ll update if he responds.