BofA Files to Foreclose on Block 37

Bank of America and a group of lenders has filed a lawsuit with the Cook County Circuit Court to foreclose on the mixed-use project being developed by Joseph Freed and Associates LLC. According to reports, Freed owes the bank more than $128 million, and the loan has been in default since the middle of 2008. BofA financed the $205-million project two years ago.

In the filing, BofA has requested that a receiver be appointed to manage the property and ensure the project reaches completion. It is unknown whom the receiver might be, should the court grant the request.

In a statement on Tuesday, Freed said, the lawsuit is a "misguided action that could halt the project" and make it "near-impossible to restart." He also said, "The suit lacks merit and [his company] will fight it vigorously."

Freed purchased the site in April 2007 after the previous developer, The Mills Corp., sold it in order to try and improve its balance sheet. The buildings on the block had been razed in 1989 and the plot has sat empty since then.

Mayor Richard Daley has spoken up in favor of the project, and said this about the lawsuit, "There's a disagreement between the developer and the banks and the banks are being pressured to have so much capital by the federal government... there's a lot...the banks are changing. They have to have so much set aside...and they're arguing that. They can't do to risk anymore."

The first retailers were slated to begin occupying space within a month. Getting tenants to commit to the site has been a challenge throughout the process. Both the David Barton Gym and clothing-retailer Lululemon pulled out of the project toward the end of 2008.

As GlobeSt.com reported, in the first quarter of 2009 Freed inked an additional five retailers, taking 13,100 square feet in the 280,000-square-foot project. At the time the project was said to be 60% leased.