• Troubled Block 37 on Market After Foreclosure Fight

    The new Block 37 mall on State Street is officially going up for sale after a long and hard-fought foreclosure battle.

    The bank group that now owns the shopping center has hired Eastdil Secured LLC to market the mall. The 280,000 square-foot mall opened in November 2009, a few weeks after the lender group sued to foreclose on the project. Bank of America leads the lender group.

    Bank of America gained control after bidding $100 million at a sheriff’s foreclosure sale in March. The bid amount is less than half of the loan’s $206 million balance. No other bids were made for the mall.

    The $100 million offer is known as a credit bit. Lenders take back properties in an attempt to satisfy the amount they are owed. These bids can sometimes indicate what lenders think a property is valued at.

    Daniel Hyman, president of Millennium Properties R/E Inc., feels the mall should draw strong interest from investors. “There’s obviously going to be interest,” Mr Hyman says. “There are more people downtown with dogs than briefcases. There are people there that would shop.”

    A spokeswoman for Bank of America confirms the hiring of Eastdil. The brokerage had been hired by the lender group to market the mortgage late in the foreclosure proceedings.

    Benjamin Law Firm – Chicago foreclosure attorney

  • Bankrupt Fraudster Fugitive Heading to Jail

    For six years, Brent Farris eluded U.S. authorities by passing through many countries across several continents after pleading guilty to bankruptcy fraud.

    On July 15, 2011, a U.S. judge sentenced Farris to 14 months in prison for failure to appear. The sentence ends six years on the run after he first plead guilty to fraud. Farris is the former owner of Farris Gallery in St. Louis.

    In his 2002 plea, he admitted to transferring ownership of an oil painting to another party. Farris intended for the unknown party to auction the painting at Christie’s in New York.

    Farris planned to conceal proceeds of the sale from his bankruptcy case. Instead, he received a 20-month prison sentence and ordered to pay $300,000 in restitution. Farris fled the country when he was released on bond prior to going to prison.

    The U.S. Marshall’s service tracked him over a five-year period. During that time, Farris travelled through 14 countries on three continents, obtaining a fake British passport to assist in his movement. He used the passport to live and work in China, and to travel around Europe and Asia undetected.

    Italian authorities detained and arrested Farris in Rome, Italy, using information provided to them by the U.S. Marshalls. He managed to escape from Italy, only to be arrested in Guadalajara, Mexico. Mexican authorities deported Farris to the U.S.

    He is now serving both of his sentences consecutively for a total of 34 months.

    Benjamin Brand Services – Chicago bankruptcy lawyer

     

  • Owner of Wrigley Field Rooftop Building Suffers Losing Streak

    The curse of the Loveable Losers is affecting The Lakeview Baseball Club, a three-story building that overlooks the right field at Wrigley. The building is heading to a sheriff’s auction after foreclosure.

    A Cook County judge issued a foreclosure judgment against the owners. A public sale for the building at 3633 N. Sheffield Ave. is scheduled for August 17.

    The owner of the building owes its bank $3 million on a senior and junior mortgage. Three other creditors are owed $715,334 according to the foreclosure judgment entered on July 8, 2011. The owner of the building is a venture of father-and-sons Robert, Anthony and R. Michael Racky.

    The bank holding the loan, First Personal Bank, originally filed its foreclosure suit in February 2010. The bank alleged the Racky venture stopped paying the monthly payments of $27,753 in December 2009. First Personal provided the $2.8 million senior loan in March 2006, and the $350,000 junior loan in April 2007.

    Anthony Racky, a managing director of the club, says the venture is trying to sell the building before the sheriff’s sale. A potential deal is in the works, although he has not identified a prospective buyer.

    Martin Oberman, the attorney representing the Rackys says the building’s worth is greater than the debt due to the bank.

    According to a Chicago Tribune article, in May 2010, the rooftop netted just $34,365. The monthly mortgage payment for that month was $31,865.

    Benjamin Brand Services – Chicago foreclosure attorney

  • Fannie Mae Moves to Foreclose on Apartment Building in Chicago Ridge

    Fannie Mae has filed a $6.1 million foreclosure suit against an 84-unit apartment building located in Chicago Ridge.

    The owners of Ridgeland Court failed to keep up with their end of the bargain. The complaint filed by Fannie Mae lists failure to make a monthly payment in May, didn’t purchase the required insurance for the building, and did not pay outstanding bills on the property within a specified 30-day period.

    Rental growth has risen in suburban buildings such as the 65,400 square foot Ridgeland, according to a recent report by Appraisal Research Counselors. The apartment market in the suburbs is strong due to the weak job market causing young people to rent instead of purchase a home.

    Ridgeland Court Apartments are fully leased according to real estate data provider CoStar Group Inc.

    The owner of the apartment building is a trust managed by SKS Properties Southwest Region Inc., according to the lawsuit.

    SKS is also in default because it transferred ownership interest in the property to another entity, SKS Properties SE LLC. This transfer violated the mortgage agreement according to Fannie Mae’s complaint.

    Fannie Mae seeks to collect the original amount of the 2007 loan. The original amount is $5.4 million, and does not include accrued interest, fees, and other costs.

    Benjamin Brand Services – Chicago foreclosure attorney

  • Desperate Housewife Eva Longoria in Desperate Bankruptcy Trouble over Nightclub

    The closing of the nightclub Eve, partly owned by “Desperate Housewives” star Eva Longoria, has set off a new round in the legal battle for control of its bankrupt parent company, Beso, LLC. The nightclub is located in the Crystals mall in Las Vegas.

    Ronen Nachum, a Beso creditor, and Mali Nachum, part owner, asked U.S. Bankruptcy Court Judge Mike Nakagawa to place a trustee in charge of Beso shortly after the closure of the nightclub. The judge denied the request to move quickly on the matter, but left open the possibility of hearing the request on a normal timeline.

    Beso owed Crystals mall, part of MGM Resorts International’s CityCenter complex, $2.3 million in back rent at the time of filing for Chapter 11 in January 2011. The mall is the largest creditor in the case. Beso has run up hundreds of thousands of dollars more in unpaid bills since the filing.

    Eve was the only nightclub at Crystals, and tried to position itself as a Las Vegas magnet for entertainment celebrities with Longoria as the marquee owner.

    However, infighting among the owners erupted in 2010 which lead to a protective order being issued against Ronen Nachum.

    Bank account garnishments, unpaid rent to Crystals, a contractor’s lien and ongoing losses drove Beso to file bankruptcy in spite of grossing $14.6 million in 2010.

    Benjamin Brand Services – Chicago bankruptcy attorney

  • Crystal Cathedral Interested in New Bidders for Church Property through Bankruptcy Auction

    The famous Crystal Cathedral church filed for bankruptcy in October 2010, listing more than $50 million in debt as the main reason for filing. Greenlaw Partners of Orange County placed an offer for the property in May 2011, but the church is now asking the court to allow partial withdrawal from a plan made with Greenlaw.

    In the May filing, an exit plan was filed with Greenlaw purchasing the Crystal Cathedral property for $46 million, leasing the church and various buildings back to the ministry and constructing apartments on areas of the property.

    Two potential buyers have expressed interest in the land, both with different ideas for use. A plan filed by the church’s unsecured creditors allows Chapman University to purchase the 40-acre campus for $46 million and lease back essential buildings to the church for less money than Greenlaw proposed.

    The other interested entity, the Roman Catholic Diocese or Orange states that it hopes the property remains a place of worship. The diocese does not have a central location of worship for the 1.2 million Catholics living in Orange County.

    Recent filings related to the bankruptcy address objections to the church’s exit plan. Objections have been filed by the U.S. Trustee, a family who paid for a group plot in the church’s cemetery, and attorneys for church founder Robert H. Schuller.

    Benjamin Brand Services – Chicago bankruptcy attorney

  • Bankrupt Owner of Spiegel Brands Runs into Trouble with Bidding Procedure

    Signature Styles, owner of Spiegel Brands and other clothing companies, has run into trouble with their Chapter 11 bankruptcy. The trustee in the case told a bankruptcy judge that Signature Styles shouldn’t receive approval of its proposed bidding procedures.  Signature Styles is a division of private equity firm Patriarch Partners and was formed to purchase Spiegel Brands in 2009.

    Under the procedures, Artemiss LLC, a newly formed division of Patriarch Partners, is to become the stalking horse bidder in exchange for assumption of $30 million in debt.

    Court documents show that the official committee of unsecured creditors in the case is “gravely concerned that the sale process currently proposed by the debtors is woefully deficient, crafted solely to benefit Patriarch, provides no benefit to the debtors estates and is nothing more than half-hearted window dressing intended to cloak Patriarch’s efforts to cleanse the debtors’ balance sheet of unsecured indebtedness with the appearance of fairness and equity.”

    The committee asked the court to take an active role in the sale process by soliciting alternative sales proposals. If the court chooses a stalking horse bidder, the process moves to a 363 sale auction. Multiple parties are invited to the auction and could outbid Artemiss and buy the company.

    Artemiss wins the auction at the agreed upon price provided no other party outbids them.

    The Spiegel company originated in Chicago in 1865.

    Benjamin Brand Services  – Chicago bankruptcy attorney

  • Joint Venture of Microsoft and Apple Win 6,000 Nortel Patents in Bankruptcy Auction

    A joint venture of Apple and Microsoft, called Rockstar Bidco LP, won permission from bankruptcy court to purchase the patent portfolio of Nortel Networks Corp. for $4.5 billion, outbidding Google in the biggest patent auction in history.

    In a joint hearing on June 11, 2011, U.S. Bankruptcy Judge Kevin Gross in Delaware and Ontario Superior Court Judge Geoffrey Morawetz in Toronto approved the portfolio sale. Over 6,000 patents and applications related to Internet and wireless technology are in the portfolio.

    Nortel started selling its businesses after it filed for bankruptcy in 2009, raising approximately $3 billion before the patent auction. The patent portfolio was Nortel’s last major asset to sell and will boost creditor recoveries.

    The winning joint venture group includes Research in Motion and Sony Corp as well as Apple and Microsoft.

    The auction had 19 rounds of bidding and opened with a bid from Intel Corp. Before the auction began, Google signed a contract to be the stalking-horse bidder with a guaranteed offer of $900 million. Intel exceeded Google’s offer, entitling the search engine company to a breakup fee of $25 million plus expenses.

    Apple initially was not part of the Rockstar group, but joined after five rounds of bidding. Intel dropped out, only to join with Google and stayed in the auction up to the 19 th round of bidding when they lost out to Rockstar Bidco.

    Benjamin Brand Services – Chicago bankruptcy lawyer

  • Las Vegas’ “Original Celebrity Chef” Files for Bankruptcy Protection

    Andre Rochat, owner of Alize’ and Andre’s in Las Vegas,  filed chapter 11 bankruptcy for himself and three businesses to reorganize millions of dollars in debt.  Rochat’s restaurant-management company, Gastronomy Management Group, is the third business included in the filing.

    Rochat’s real estate holding company, A&A, filed for chapter 11 bankruptcy in January 2011.

    The bankruptcy petition shows Alize at the Palms lost $93,000 in 2010, and Andre’s at the Monte Carlo lost $290,000 in the same year. Joseph Marsco, Gastronomy’s director of operations, said that they took on too much debt while the economy tanked.

    The main issue driving the bankruptcy filings are foreclosure attempts by Plaza Bank, successor to failed SouthwestUSA Bank. Records filed with the court show that Rochat has been in litigation with Plaza Bank. The bank also claims that Rochat may be liable for any deficiency balance under his personal guarantees. Rochat and the three companies listed $2.3 million in claims held by Plaza Bank in the petitions.

    Plaza Bank objected to the sale of the site of the original Andre’s restaurant, held under A&A, Inc.

    Rochat’s personal bankruptcy filing lists liabilities of $4.25 million. Most of the amount appears to stem from personal guarantees for business debt. His personal assets total $418,000 according to the filing.

    Benjamin Brand Services – Chicago bankruptcy attorney

  • Singer of “I Believe I Can Fly” Brought Down by Foreclosure

    Award-winning R&B artist R. Kelly is facing a $2.9 million foreclosure suit on his mansion in Olympia Fields.

    The music artist has not made a payment on his mortgage since June 2010 according to a complaint filed by J.P. Morgan Chase Bank N.A. in Cook County Circuit Court. The bank filed the lawsuit in June 2011.

    The mansion is a two-story house on a 3.7-acre site. Included in the home are six full bathrooms, seven half-baths and a four garage, as listed by the Cook County Assessor’s website.

    Mr. Kelly constructed the 11,140-square-foot home in 2000, but has not lived there for over a year according to an individual familiar with his movements. The source said that payments were stopped in an attempt to force the bank to negotiate a modification of the loan.

    At issue is the current appraisal amount on the home. The mansion appraised for $5.2 million in 2009, but fell 26% to $3.8 million in 2010. The home is now worth less than the debt, according to the source.

    The current principal amount due is over $2.9 million. Not included in the debt is unpaid interest, which is accruing at the rate of $251 a day, and various related charges from the bank.

    Benjamin Brand Services – Chicago foreclosure attorney