|Share on Facebook|
|Share on Twitter|
The developer of a high-profile condo building in downtown Oak Park recently filed for bankruptcy, faced with $5.9 million in unpaid bills.
Richard Curto built the 44-unit condo building at 1120 Lake St. in 2007. And since then, the project has been mired in controversy, including numerous lawsuits, one from the building's condo association alleging shoddy construction.
Another chapter was written in the 1120 Club's book last month, as Curto, on behalf of the limited liability corporation, filed for Chapter 7 bankruptcy, which usually results in liquidation of a developer's assets. In the filing, Curto lists $5.9 million in debt, owed to about 50 different parties.
Those debts include a $1 million mortgage to buy the historic Dreschler building just east of the development, and a $1.7 million mortgage to buy five condos, four of which are currently being rented. Curto owes money to everyone from Trapani Construction ($1.2 million) to the Barnes & Thornburg law firm ($148,000), according to court documents.
The total amount of debt is likely to grow, as Curto plugged in several "unknowns" in the filing because of ongoing lawsuits and yet-to-be received tax bills.
Curto — who is the founder and chief of RSC &Associates, the management company for 1120 Club LLC — did not return phone calls and emails on Monday seeking comment.
RSC & Associates was faced with a series of lawsuits in the past four years, all related to the 1120 Club. Parties taking the Oak Park-based developer to court included the building's condo association, village hall and an investor that almost bought the retail portion of the development.
The condo association complained of shoddy construction on the seventh floor, which caused sections of concrete to "warp or fail," allowing water to flood into the building, according to the original complaint.
That lawsuit, first filed in May 2009, is yet to be settled, according to Mike Salvati, treasurer of the condo association. The suit is also against Trapani Construction and 1120 Retail LLC (a California investor that bought the retail space in the building), and is seeking $750,000.
The association was forced to take out a loan and levy a special assessment to condo owners in order to make repairs, which Salvati estimates could cost more than $1.5 million, and should be done by the end of the summer.
"If I have a wall that totally breaks down where I have water coming 2, 3 feet into my unit every time it rains, I have to do something about it," he said. "Even though it might have been his (Curto's) responsibility, in my opinion, we just couldn't wait."
Village hall also sued RSC & Associates in 2009 over poor construction, hoping to get the developer to fix issues with the property. Part of the project was built on village-owned land, so Oak Park entered into a legally binding redevelopment agreement in March 2004, requiring RSC to meet certain guidelines. Oak Park gave the property to RSC, and reimbursed the developer for demolition and remediation costs at the site.
That case, too, has yet to be settled. Village Attorney Ray Heise said Oak Park will continue pursuing the lawsuit, both in and out of bankruptcy court.
And Heise was expecting to testify this week in yet another lawsuit related to the 1120 Club. Brandenburg Family Associates sued RSC & Associates in August 2007. The California-based company had put down $1.5 million in earnest money, looking to buy the building's retail space for $16.2 million. But the group backed out of the deal and never got its money back.
A different California investor, calling itself 1120 Retail LLC, ended up paying $15.8 million for the space, which is occupied by a fitness club, bar, bagel shop and plus-size women's store. Salvati said an arbitrator ruled last month that the retail owner needs to pay some $240,000 in shared operating expenses that haven't been paid in years.
Lawyer Catherine Steege has been appointed as "trustee" in the bankruptcy case. Steege said she'll be charged with sorting through the developer's assets, figuring out which ones can be turned into cash to help pay off the creditors.
Those assets include five condos in the 1120 Club, part of the Dreschler Building and 12 parking spaces. Curto also lists "counterclaims" in court against village hall, the construction company and the condo association as possible assets.
Steege said bankruptcy laws will determine which of the 50 or so creditors will be first in line to get paid when the assets are sold. A meeting of creditors is scheduled for June 26.
Village Trustee Ray Johnson was on the village board that first green-lighted an agreement with RSC in 2004. He said the developer seemed reputable at the time, having completed several other successful projects.
Johnson speculated that the economy was partly to blame with some of the 1120 Club's issues. He thinks village hall should be stronger in its oversight in the future to avoid similar situations, and said the retail portion was successful.
"I acknowledge that there are issues, but it still has brought an awful lot of vitality to downtown," he said.
Hire Local for FREE!
Sign-up to get the latest news updates for Oak Park and River Forest.
|Photo store||Contact us|
|Submit Letter To The Editor|
|Place a Classified Ad|