One of the reasons I decided to move to Chicago is the splendor of the downtown city skyline. It is, in my opinion, one of the most architecturally beautiful cities in the United States. And because I am interested in the development sector, I usually like to keep up to date with ongoing and planned projects in the area. Not long ago I came across an article in the Chicago Tribune
 claiming that the developer in the failed “Chicago Spire” project has found a new investor to resume construction. For those of you unfamiliar, the Chicago Spire is a 150-story mega skyscraper designed by Spanish architect Santiago Calatrava to be constructed near Navy Pier.
As it was planned, the project would tower above downtown and be the focal point of the city skyline. Due to the economic downturn, the developer of the project, Garrett Kelleher, was unable to secure enough financing for the $1.5B project. It quite literally never got off the ground. Since 2010, the project has been tied up in a protracted legal battle and the property was put into receivership, killing the development. Kelleher is still the owner of the property, but according to the article, owes more than $93M in principal, interest and late fees on the mortgage. No construction on the site has occurred since 2008 and a 76-foot-deep foundation hole remains at the 400 N. Lakeshore property.
Kelleher bought the property in 2006 for $64M with a mortgage from Anglo Irish Bank. During the foreclosure crisis, the Irish National Asset Management Agency took over the debt which it later sold last summer to Related Midwest, a real estate development firm. In 2010, Lorig Construction, one of the construction companies responsible for building the ramps to and from Lakeshore Drive, initiated foreclosure proceedings against Kelleher’s company, Shelbourne North Water Street, LP, and it has since been placed into receivership. As I’ve come to learn through my work at the clinic, under Illinois law a mechanic’s lien or construction lien, like Lorig’s, is statutorily given priority over the value added from the improvements constructed. This can often frustrate mortgage companies who expect to have priority by recording their lien documents first.
Last November, Related filed a federal lawsuit against Shelbourne seeking repayment of more than $95M of guarantees it had made on the project. Shelbourne was subsequently forced into bankruptcy. As part of the litigation, Shelbourne could file a reorganization plan to exit the bankruptcy proceedings, which would involve a plan to pay off the existing debts owed to the creditors. Surprisingly, last January Shelbourne filed a reorganization plan seeking court approval to move forward with an investment of up to $135 million from Atlas Apartment Holdings LLC, a Northbrook-based apartment development and management company. According to the article, Shelbourne has stated that the amount would enable it to pay all bona fide bankruptcy claims in full and as part of the deal Atlas would become a stakeholder in the development project for the site. There is no detail in the court documents about the additional funds needed to construct the twisting, 2,000-foot tower that was to be the tallest building in the Western Hemisphere. Nonetheless, it appears that actions are underway to continue work on the once famous Chicago Spire.
 Mary Ellen Podmolik, Chicago Spire developer gets funding, wants to resume project, Chicago Tribune, Feb. 7, 2014, available at http://www.chicagotribune.com/business/breaking/chi-chicago-spire-20140207,0,6626095.story. All factual statements and inferences contained in this blog post have been drawn from this Chicago Tribune article.