The release notes litigation documents claim Mortgages Ltd. defaulted on its funding obligations for the 275-unit Centerpoint Condominiums at 110 E. Seventh St. in 2007 by failing to fund loan draws in full before funding finally ceased. In the meantime, Mortgages Ltd. filed for Chapter 11 bankruptcy in June, following the suicide of founder and CEO Scott Coles.
A call to Richard Feldheim, president of Mortgages Ltd., was not returned by deadline.
The Avenue Communities statement also notes that in fall 2008, Avenue Communities and Mortgages Ltd. struck a $75 million deal which was to have been curative of Mortgages Ltd.'s original funding breach. However, except for $2.8 million in financing granted on September 2 through bankruptcy court, there has been no money forthcoming from the troubled lender. Furthermore, the statement notes, hearings continue to be delayed.
"Mortgages Ltd.'s default on its funding obligations has already cost us tens of millions of dollars in damages," says Ken Losch, principal of Avenue Communities in the press release. He adds that with no progress on the settlement agreement and continued hearing delays, Avenue Communities had no choice but to file suit. "Mortgages Ltd. is in default with us; yet they are not working toward a resolution," he comments.
Avenue Communities launched construction on Centerpoint in 2005. The developer has so procured $22 million in pre-sale commitments for condominium homes. Losch expects to move forward on construction of the project, with plans to open Tower One in spring 2009 and the retail plaza level during summer 2009.
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