• Allerton Hotel Files Chapter 11 to Halt Foreclosure

    The owner of the Allerton Hotel, ALT Hotel LLC, filed for chapter 11 bankruptcy petition on May 6, 2011. Filing the case has stopped an attempt by an investor to foreclose on a $69 million loan that is secured by the property. ALT Hotel LLC is an affiliate of Petra Capital Management.

    Normal operations will continue at the Allerton throughout the bankruptcy case. The hotel is a historic property that is located on the corner of Michigan Ave. and Huron St. It is famous for its Tip Top Tap sign spelled out in neon, located at the top of the building. The Tip Top Tap had its heyday in the 1940s and 50s, closing in 1961. However, the sign stays lit to this day.

    A statement by the Chicago hotel’s bankruptcy lawyer said that “this filing is designed to protect against hostile predatory actions by one secured creditor that could have gravely adverse consequences for the hotel, its employees other creditors and vendors.”

    The question that remains is if the hotel is worth more than the loan. Stated in the petition are assets of $100 to $500 million, as well as $50 million to $100 million in debt, indicating that ALT/Petra thinks that is. The source of the valuation is unknown. Hotel occupancy levels and room rates are on the upswing, strengthening the property’s cash flow and overall value.

    If you are looking for bankruptcy information , contact a Chicago bankruptcy attorney. A bankruptcy attorney can assess your situation and advise you accordingly.

     

    Allerton Hotel Files Chapter 11 to Halt Foreclosure

    The owner of the Allerton Hotel, ALT Hotel LLC, filed for chapter 11 bankruptcy petition on May 6, 2011. Filing the case has stopped an attempt by an investor to foreclose on a $69 million loan. The hotel is the security for the loan. ALT Hotel LLC is an affiliate of Petra Capital Management.

    Normal operations will continue at the Allerton throughout the bankruptcy case. The hotel is a historic property that is located on the corner of Michigan Ave. and Huron St. It is famous for its Tip Top Tap sign spelled out in neon, located at the top of the building. The Tip Top Tap had its heyday in the 1940s and 50s, closing in 1961. However, the sign stays lit to this day.

    A statement by the Chicago hotel’s bankruptcy lawyer said that “this filing is designed to protect against hostile predatory actions by one secured creditor that could have gravely adverse consequences for the hotel, its employees other creditors and vendors.”

    The question that remains is if the hotel is worth more than the loan. Stated in the petition are assets of $100 to $500 million, as well as $50 million to $100 million in debt, indicating that ALT/Petra thinks that is. The source of the valuation is unknown. Hotel occupancy levels and room rates are on the upswing, strengthening the property’s cash flow and overall value.

    If you are looking for bankruptcy information , contact a Chicago bankruptcy attorney. A bankruptcy attorney can assess your situation and advise you accordingly.

  • Chicago Rabbi Facing Foreclosure on his Gold Coast Home

    Chicago based Rabbi Meir Chai Benhiyoun of Lubavitch Chabad is facing foreclosure on his house at 1236 N. Dearborn St. He is using social media to raise funds for paying off a $4.6 million loan from PrivateBank Trust and Co. If he cannot raise the necessary amount by June 13, the home is going to auction.

    Lubavitch Chabad took out a loan for $4.9 million in 2005 for construction of a new synagogue located at 111 W. Chestnut St. Currently, services are held at the Dearborn St. house and regularly hosts up to 90 people during a holiday. In order to finance the loan, the Dearborn St. property was used as collateral. However, the downward change in the economy caused the construction plans to fall through.

    The Chestnut St. property is on the market for $3.1 million, $1.8 million less than the amount of the original loan. There is no mention of a short sale . LG Development Group almost purchased the property in 2008 with plans for a 28-story high rise. However, neighborhood complaints and zoning issues caused the project to fall apart. A completed sale of the property would have allowed Lubavitch Chabad to pay off the bank.  Talk is ongoing with another Jewish institution for sale of the property.

    For more information on foreclosure help , contact a Chicago area foreclosure attorney.

  • Giordano’s pizza chain owners ordered out of Chicago headquarters

    A federal bankruptcy court recently ordered the takeover of the famous Chicago Giordano’s pizza chain.   However, the company’s president and his family member refused to leave the Chicago headquarters.  The company filed bankruptcy in February.

    According to court filings, the family would not let on the premise the appointed trustee handling the Chapter 11 takeover and even threatened to call the sheriff’s office.  The trustee appealed to the court for an order to force the family out permanently.  The turn of events is not uncommon says one Chicago bankruptcy lawyer .

    According to reports, the owners of the pizzeria, Giordano’s Enterprises Inc., had missed important court deadlines in the case, had not paid court fees, and had even fired its attorney.

    The company has remained quiet about the cause of bankruptcy and how it planned to emerge, if at all, from its financial troubles.  The trustee also claims to have very little knowledge about the financial workings of the company.

    According to the Chicago bankruptcy attorney , the process will likely become extremely tense if the company and its operators continue acting hostile towards the trustee.  The last thing the company wants is to have the court continuously issuing orders directly aimed at the operators.

  • Another one bites the dust: Orland Park Re/Max franchise to liquidate

    Re/Max Team 2000 in Orland Park, one of the first such franchises in Chicago, recently filed for bankruptcy.  Team 2000 was started in the 1970s.  A court appointed trustee will help dissolve the business.

    But a new Re/Max franchise located at the Team 2000’s central office has opened in its stead.

    According to the Chicago Regional Manager of the Team 2000 office, a “vast majority” of the 110 agents are continuing with the new franchise. Others have relocated to separate Re/Max offices or have joined new firms.  Team 2000 employees found out just two days before the filing that the business was shutting down.

    Re/Max Team 2000 in Orland Park had listed assets of more than $720,000 and almost $3.9 million in liabilities.  The business filed Chapter 7 bankruptcy.

    According to one Chicago bankruptcy attorney , businesses usually use Chapter 11 to attempt to reorganize and then emerge from bankruptcy; Chapter 7 on the other hand signifies that a business will liquidate and sell assets to satisfy debts.  Without knowing the specific details of the business’s financial woes, it is hard to speculate why Re/Max 2000 would choose Chapter 7.

  • Huge drop in foreclosed home prices reported in Chicago and many cities nationwide

    According to the S&P and Case-Shiller index of property values,  at least 20 cities’ home prices  fell 3.3 percent in just a year-the biggest single year drop since November 2009. Year-over-year statistics provides the best indications of trends in pricing.

    Many bankruptcy and foreclosure attorneys predict that prices will keep falling as the number of foreclosed homes grows. Most economists agree.

    “Housing will continue to lag the recovery until foreclosures abate,” said Sal Guatieri, an economist at BMO Capital Markets Inc. in Toronto. “The negative wealth effect from home price declines seems to be more than offset by stock market gains [and] the economy is moving in the right direction.”

    Phoenix led the group of 20 cities with an 8.4 percent slump followed by an 8.3 percent in Minneapolis. Chicago, Atlanta, Las Vegas, New York, and Miami showed the lowest prices since 2006.  In Chicago, along with many of the other large cities, bankruptcy attorneys have seen a large increase in business due to the dramatic rise of foreclosure rates.

    Treasury Secretary Timothy F. Geithner believes it is “going to take a long time” to fix the housing market.  Continuing, Geithner stressed that “we’re just at the beginning of trying to figure out how to fix that mess.” Most bankruptcy lawyers agree with the Secretary’s advisement .

  • 41 percent drop in mortgage fraud cases

    According to LexisNexis Mortgage Asset Research Institute, reported mortgage fraud incidents fell 41 percent between 2009 and 2010.  The news marks the first reduction in several years, according to the report.

    The report suggests that tightened standards are making it tougher for perpetrators to commit fraud.

    Even with the reduction, the Treasury Department estimates that fraud still accounts for more than $1.5 billion in annual losses to the real estate market. The Mortgage Asset Research Institute’s report believes the losses to be much higher than the Treasury’s estimate.

    “The industry is plagued with vulnerabilities within the origination process that expose lenders to risk,” according to the Institute.

    Florida tops the list with the largest amount of mortgage fraud-it has done so for the last five years.

    Illinois and Michigan were the only two states in the Top 10 of the list that actually demonstrated declines.  According to many Chicago bankruptcy and foreclosure attorneys , the biggest source of fraud involves the mortgage application, where borrowers misrepresent their financial situation or their identity. The second most common area of fraud is in the appraisal or valuation of the property itself.  Short sales and foreclosure follow in droves.

  • Study shows racial variance in Chapter 13 bankruptcy filings

    Everyone has seen the commercials: the promise that by calling this number, immediately, all your financial woes will be lifted.  All your questions will be answered.

    Many have fallen for the trap.  Many have filed for Chapter 13 bankruptcy when doing so was not a good option.  Perhaps they should have filed Chapter 7.  The mistake is quite common.  It is even more common among African Americans living in Chicago.

    According to a study released this month by Chicago’s Woodstock Institute, filers in mostly African American Chicago communities disproportionately choose Chapter 13 compared to peers from predominantly white neighborhoods:  47.9 percent compared to 32.8 percent.

    Pursuant to Chapter 7, debts are discharged after the liquidation of assets (other than their homes, vehicles and other exemptions). But a majority of low-income filers do not have any non-exempt assets. Chapter 13 requires a commitment to a plan of payments to creditors for up to five years before the remaining debt is discharged.

    According to the report, many file for Chapter 13 because they fear they would lose their homes if they filed for Chapter 7.  However, many Chicago bankruptcy attorneys would likely advise low-income workers to file for Chapter 7 . Aside from the advantages inherent in Chapter 7 to protect assets, the filing usually cost much less then Chapter 13.

    However, there are reasons why a filer would choose Chapter 13 over Chapter 7.

    Some people file for Chapter 13 because of their larger incomes. Others choose 13 for the reason it allows the rolling of past-due mortgage payments into the creditor payment plan.

    The report does not attempt to draw conclusions as to which African Americans are more likely to file Chapter 13.  Chicago bankruptcy lawyers s are equally perplexed by the phenomenon.  What they tend to agree on is that many of these low-income workers are simply not receiving good advice.

  • With skyrocketing debt, Chicago hotel files bankruptcy

    Another Chicago based hotel has filed for bankruptcy protection.  Yet despite the unfortunate but all too common news, the owners of the property stand committed to remain open and conduct normal business during the tedious process.

    ALT Hotel LLC, the owners of the once profitable hotel, claims to have approximately 100 to 200 creditors. The debt of the venture is staggering which is expected to have reached approximately $50 million to $100 million. The debt equals or exceeds the new worth of the parent company which has assets ranging from $100 million to $500 million.  In these times, many Chicago bankruptcy attorneys are used to seeing debt exceed assets.

    Though once certain the hotel would avoid bankruptcy, the owners now argue that the bold actions of single creditor has threatened the hotel’s future, causing no the owners no choice but to file. The list of creditors is extensive and includes Wells Fargo, Diamond Rock Hospitality, and Diamond Rock Allerton Owner LLC.  The hotel owners expect these debtors to file lawsuits.

    A spokesperson for the hotel claims the hotel will emerge stronger then ever.

    “We are very proud of the significant improvements in hotel operations and performance in the few months since we assumed ownership.  We have met all our obligations, and enjoy strong positive cash flows.”

    The list of secured creditors was not cited in the bankruptcy filing.

  • Chicago foreclosures drop in March compared to last year but dramatically rise from February

    Chicago has recently received a bit of good news concerning its ultra-volatile real estate market.  In March, the city’s foreclosure filings fell 15.7 percent from last year.  However, the drop was not quite as positive as one might expect because filings still jumped 23.1 percent from February of this year. Given the large jump from February, many Chicago attorneys specializing in bankruptcies and foreclosures , warn that news, though positive, should be read with a bit of caution.

    RealtyTrac, a nationwide market watch company issued the findings.  The report also shows foreclosure filings at a three-year low across the country.  The news is good but RealtyTrac also warns that the real estate market still faces huge problems and concerns.

    According to the report, Chicago area bankruptcy filings fell 28.2 percent in the year’s first quarter compared to last year.  This year’s quarter also dropped 22.5 percent from last year’s fourth quarter.

    In March, 10,821 homes declared bankruptcy in the Chicago area, falling from 12,830 in March 2010. Approximately one in ever 350 homes file. The state ranks as the eighth worse in the country with one in every 439 homes filing in March; the total was 12,053 in March.

    Nationally, the number of homes receiving filings during the quarter dropped 26.9 percent to 681,153 from a year earlier and fell 14.8 percent from the fourth quarter of 2010.

    Given that bankruptcies are still a pervasive problem in Illinois, bankruptcy lawyers and government officials still warn of possible declines in the real estate market, especially in Chicago.

  • Illinois legislators take aim at powerful debt collection industry

    Illinois General Assembly continues to mull over legislation that would change how the state’s repossession agents operate.  Illinois bankruptcy and repossession lawyers , consumer right advocates, and other professionals connected to the debt collection industry view the law as a positive sign toward protecting individuals from collectors.

    Illinois Senate bill No. 1306-the Collateral Recovery Act-has made it to the House’s Judiciary Civil Law Committee.  The bill will probably be modified by the Committee.

    The Act would significantly change state law.  If passed, it would require licensing of repossession agencies and recovery managers as well as repossession agency employees. The law would contain certain provisions addressing qualifications, application, examination, assignment, insurance requirements and administrative proceedings of the recovery companies.

    The bill was recently amended to become enforceable on July 1, 2012.

    The law also requires repossession agents to buy permit tickets for each potential recovery. The cost of tickets will be $10.  The bill makes it a crime to not purchase a ticket.

    Concerning enforcement of the law, legislatures will grant the Illinois Commerce Commission jurisdiction over industry disciplinary action and the licensing of managers, companies, and agents. State, county and local governments would also be required to assist the Commission in the enforcement of the law.

    The Act would have an impact on the entire debt-handling industry, including foreclosures, bankruptcies, and property repossession.

    Many professionals within the industry applaud the Assembly’s attempt to regulate more heavily the processes of debt collection.  Out of control debt collection is especially a problem in Chicago and other highly populated areas of the state.  Most  Chicago based bankruptcy attorneys , for example, believe the law will better protect their clients from a variety of issues associated with the process.