The Irish developer behind the Chicago Spire said it has found an investor to pay its creditors, allowing it to emerge from bankruptcy and possibly restart work on the long-stalled residential project.
In papers filed with U.S. Bankruptcy Court Thursday, Shelbourne North Water Street LP, the firm headed by Irish developer Garrett Kelleher, is seeking court approval to move forward with an investment of up to $135 million from Atlas Apartment Holdings LLC. Shelbourne said the amount would fully fund its reorganization, enabling it to move forward with the project.
While Shelbourne said the investment will allow it to pay bona fide bankruptcy claims in full, there is no detail in the documents about the additional funds that would be needed to fund construction of the skyscraper.
The Spire site, 2.2 acres at 400 N. Lake Shore Drive, was intended to be the tallest building in the Western Hemisphere, a twisting, 2,000-foot condo tower designed by Santiago Calatrava. Beanie Babies creator and billionaire Ty Warner, recently sentenced to probation for tax evasion, became the highest profile buyer in the project, signing a contract in 2008 for a penthouse unit that was listed for $40 million.
But work at the site stopped that same year as the project was caught up in the financial and housing markets’ meltdown. The project went into foreclosure in 2010 and a protracted legal battle began in several courts. It remains a hole in the ground.
Last summer, Related Midwest, whose Chicago properties include luxury rental buildings at 500 N. Lake Shore Drive and 111 W. Wacker and condos in the South Loop, bought the delinquent debt on the project at a discount from National Asset Management Agency in Ireland. In November, an affiliate of Related filed a federal lawsuit against Kelleher seeking more than $95 million in guarantees he made as part of the project.
Also, in October, an involuntary bankruptcy petition was filed against Shelbourne by Related and other creditors. Shelbourne was given the exclusive right until March 10 to propose a reorganization plan to the court.
“Given the ongoing recovery in the Chicago property market, the timing is better now than when this project commenced,” Kelleher said in a statement. “I am delighted to have found a partner who believes in the project as passionately as I do.”
Under the proposed agreement filed with the court Thursday, Shelbourne would try to have a reorganization plan confirmed by the court by Aug. 31. In addition to paying all claims, that plan could involve the transfer of some or all of the property to Atlas, according to the filing.
Atlas would be entitled to a break-up fee of about $4 million plus up to $750,000 in expenses if Shelbourne does not have a reorganization plan confirmed by the court by Aug. 31 and have it take effect before Oct. 31, among other conditions.
“We have been working with Garrett Kelleher over the past several months and now share his belief and vision in the Chicago Spire,” said Steven Ivankovich, CEO of Northbrook-based Atlas, a residential developer and apartment owner, in a statement. Source: The Chicago Tribune.