(Crain’s) — A company formed to develop a 102,000-square-foot shopping center in Glenview has filed for Chapter 11 bankruptcy protection, thwarting a mezzanine lender’s plan to auction off the company’s stake in the project.
Central Park Development LLC had pledged its membership interest in the development at 600 Milwaukee Ave. in the north suburb as collateral for a $5.2-million loan from a subsidiary of lender CF Capital Partners Inc. The financing helped the developer launch construction last year, just months before the economy plunged.
Chicago-based CF Capital scheduled an auction for last Monday to sell the ownership stake in the partially built project, according to a public notice. But Central Park blocked the auction by filing for protection from creditors Monday in U.S. Bankruptcy Court in Chicago.
Mezzanine lenders typically hold such auctions only when a loan is in default, but the notice did not say why CF Capital was selling the stake. CF Capital Principal John Cadden declined to comment.
Northbrook-based Central Park member Hyun “Steve” Kang could not be reached for comment, and Mr. Kang’s attorney did not return a phone call.
Central Park picked a tough time to launch the project, as retailers nationwide have closed stores and scaled back expansion plans. Locally, the retail vacancy rate in the third quarter rose to 11.7%, the highest level since 1994, according to CB Richard Ellis Inc.
But news of the proposed retail project’s troubles still surprised Glenview Director of Development Mary Bak, who said the village thought the development was progressing, even though Mr. Kang hadn’t signed any tenants.
Central Park acquired the nine-acre development site in March 2008 for nearly $8 million. Fifth Third Bank was the main lender for the proposed retail project, providing Central Park a $20.7-million construction loan and a $2.8-million line of credit.
The construction loan was to mature Sept. 6 but was extended two months, to Nov. 6, according to property records. The line of credit comes due in March. A bank spokesman declined to comment.
Central Park owes Fifth Third, its largest creditor, $10.3 million, according to the bankruptcy petition, while the CF Capital subsidiary, Catfish Glenview LLC, is owed $6.2 million.
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