Group Challenges Chicago Spire Financing Plan

By Chuck Sudo in News on Feb 17, 2014 10:15PM

The hole in the ground that is the Chicago Spire site, seen in April 2010 during the collapse of the commercial real estate market. (Scott Olson/Getty Images photo)

The $135 plan to kickstart the Chicago Spire skyscraper project has been challenged by the group that currently holds the delinquent debt on the property.

RMW Acquisition Co. LLC revealed in court documents Monday it offered the project’s originator, Shelbourne North Water Street L.P., debtor in possession bankruptcy funds in December, before Shelbourne announced their agreement with Atlas Apartment Holdings LLC last week to pay off claims and emerge from bankruptcy. RMW said it offered to provide Shelbourne with $1 million in bankruptcy financing at an 8 percent interest rate and claimed that Shelbourne’s proposed deal with Atlas could result in the receiver of the property to miss its March property tax payment if the conditions of the deal aren’t met.

Per the Tribune:

The Atlas financing plan “makes no economic sense and the debtor is proposing it for one reason only: to lock up this bankruptcy case in favor of the non-competitive, non-transparent plan process contemplated by the Atlas Investment Agreement Motion,” Related’s filing stated.

The Atlas proposal “provides for exorbitant fees, a pawn-shop like 15 percent interest rate with an even higher 20 percent default interest rate,” and among other things, “an inadequate $250,000 loan commitment which is projected to run out midway through this case, inviting unnecessary chaos when the estate can least afford it.”

Shelbourne’s deal with Atlas is contingent on approval from the court. It also calls for court approval of $4.8 million in breakup and expense reimbursement fees for Atlas that would be owed if it isn’t approved by Aug. 31, implemented by Oct. 31, or if Shelbourne enters into another agreement for the Spire. Shelbourne and Atlas would also have to secure financing to restart construction of the sire, which would become the tallest skyscraper in the Western Hemisphere is completed.