Source: bestchicagocondos.com, 09.10.2010

The developer of the Chicago Spire is back in the news, but again it’s not in a good way. Garrett Kelleher had filed a lawsuit against Bank of America, claiming that the lender had charged more interest than was originally agreed upon on a couple of loans. Mr. Kelleher stated that he believed the interest was supposed to be calculated on 360 days per year but BofA used a 365 day per year rate. According to a recent Crain’s report, a federal judge dismissed the suit on August 18th, paving the way for BofA to to continue with their lawsuit to force Shelbourne Development to repay the $4.9 million in loans.

The federal judge also ruled out Shelbourne’s claim that Bank of America acted in bad faith, because the loan interest terms were written into the contract. The judge has set a settlement hearing for the two parties for September 28th. Mr. Kelleher’s lawyer said in the article that they intend to petition the judge to reconsider the ruling and if that doesn’t work they will formally appeal. The lawyer was encouraged because the judge didn’t dismiss Shelbourne’s claim that the loan couldn’t be repaid because of the “unforeseeable and unprecedented economic downturn and recession.”

BofA most likely will continue with their collection efforts since the original payback date was November of 2008. If Mr. Kelleher continues to counter sue and appeal, it may take some time to resolve the issue. According to the article, the Irish developer is still trying to find a source for construction financing on this stalled Chicago real estate development. But with sales of Downtown Chicago Condos still struggling, it’s doubtful that any lender will want to back a project the size of the Spire right now.