Lender seeks ownership of athletic club

Lawrence Athletic Club, 3201 Mesa Way.

A default on a $2.4 million loan has created questions about the future of one of the city’s larger athletic clubs and exercise facilities.

Meritrust Credit Union has filed a petition in Douglas County District Court seeking a legal ruling declaring the credit union now owns the real estate, equipment and all other business interests of the Lawrence Athletic Club, 3201 Mesa Way.

An attorney for Wichita-based Meritrust confirmed the credit union is seeking ownership of the club after longtime LAC owner Rick Sells and his corporation Junkyard’s Jym defaulted on a $2.4 million note. But the attorney said the club’s several hundred members should not worry the exercise facility is planning to close.

“I’m confident that everybody involved wants all the people who are working out there to be able to continue working out there without interruption,” said Eric Bruce, an attorney for Meritrust. “Nobody wants to cause problems for anybody who is a member of the organization.”

According to the filing, it appears Sells has agreed to turn the property and the business over to Meritrust. The filing states “Junkyard’s Jym, Inc. has quit- claimed its interests in the subject property to the credit union.”

Sells did not return phone calls seeking comment, and an attempt to reach a manager of the club, which was open on Thursday, was not successful.

It isn’t clear whether Sells remains involved in the management and operation of the club. Bruce was guarded in his comments about the matter, but said to the best of his knowledge Sells was still involved in managing the club.

As for the ownership issue, Bruce said the court filing was an attempt to ensure no other parties had a legitimate claim to the property or business. The legal filing indicated other parties may try to make a claim on the property, including the Lawrence real estate company The Caspian Group.

The Caspian Group, which is led by longtime Lawrence landlord George Paley, won in August a nearly $400,000 judgment against Junkyard’s Jym in Douglas County District Court. That ruling stemmed from a lease dispute at 1202 E. 23rd Street, which housed Lawrence Athletic Club East before it shut down.

Shortly after the August ruling, Sells filed for bankruptcy protection. At the time, Sells told the Journal World he did not believe the ruling or his bankruptcy would impact his ability to keep the club open.

Bruce indicated that Meritrust would begin seeking a new owner for the facility once it has clear title to the property and business.

“If this goes as we want it to, we won’t own it and somebody else will,” Bruce said. “Meritrust is a credit union. It doesn’t want to own a gym.”