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Things are getting rough for Donald Trump as the lead lender on his tower going up downtown has filed suit, seeking to collect $40 million in guarantees Trump made about the building. The suit was filed Friday by Deutsche Bank Trust Co. Americas, claiming Trump has defaulted on the $640 million loan when he didn't pay off the remaining $334.2 million to the bank and other lenders by November 7. Trump has previously filed suit against the lenders in which he "asked a judge to uphold a so-called force majeure clause in the loan agreement, which permits an extension due to an extraordinary event — in this case, the global financial crisis, according to the complaint."
In their suit, Deutsche Bank says, "Because 401 NWV (the venture) failed to pay the outstanding debt on the maturity date of Nov. 7, 2008, Trump is obliged by the payment guaranty to pay Deutsche Bank the outstanding balance owed. To date, he has failed to pay. Therefore, Trump has breached his obligations under the payment guaranty." Deutsche Bank is also refuting the force majeure claim, citing a November 4 newspaper article (the same day they were informed of Trumps invoking the clause) that detailed Trump's efforts to build a new golf course in Scotland and in which Trump himself said, “The world has changed financially and the banks are all in such trouble, but … we are doing very well as a company and we are in a very, very strong cash position.” Oops.
Trump’s attorney, Steven Schlesinger, is confident the issue will be resolved: “We’ll have a knock-down, drag-out for the next six months over this. This project will be completed and sold out before this gets resolved…This is, in my mind, legal stupidity.” Schlesinger says the tower is on schedule and will be completed by the spring as originally planned.
Photo by Jeff Woelker
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Fingers crossed some sort of agreement comes out of this lawsuit allowing the new owners to rename the tower so I don't have to think of that douche every time I look at the Chicago skyline.
Interesting to read that Trump put his own money in the game. He usually shields himself against such things by working through a LLC or other legal shield.
The force majeure defense is weak especially due to his recient statements. One could make the case that Trump, as a developer, is partially responsible for the meltdown in housing prices and would make his reasons (housing market meltdown) for enacting this clause invalid. Normally this type of clause is used to deal with war, a major flood, or a strike. Plus it is great to see this pompous ass get thrown out of his own project.
[cobra fingers] "You're Fired"