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In Re: Olde Prairie Block Owner, LLC v. Olde Prairie Block Owner

September 30, 2011

IN RE: OLDE PRAIRIE BLOCK OWNER, LLC, CENTERPOINT PROPERTIES TRUST, APPELLANT,
v.
OLDE PRAIRIE BLOCK OWNER, ) LLC, APPELLEE.



Appeal from U.S.B.C. No. 10-22668

The opinion of the court was delivered by: Judge Ronald A. Guzman Debtor

(Consolidated)

MEMORANDUM OPINION AND ORDER

CenterPoint Properties Trust, one of the creditors of Old Prairie Block Owner, LLC ("Debtor"), which is in Chapter 11 bankruptcy proceedings, appeals the bankruptcy court's: (1) December 10, 2010 order denying CenterPoint's motion to amend findings of fact and conclusions of law; (2) December 13, 2010 and March 31, 2011 orders granting Debtor's motion to enter into a debtor-in-possession credit facility secured by a superpriority priming lien on the Debtor's assets; and (3) the February 14, 2011 order denying CenterPoint's motion to enforce order on its motion to lift the automatic stay. For the reasons set forth below, the Court dismisses the appeals of the December 13, 2010 and March 31, 2011 orders and affirms the December 10, 2010 and February 14, 2011 orders.

Facts

Debtor owns real estate at 230 E. Cermak Road ("Olde Prairie Property") and 330 E. Cermak Road ("Lakeside Property"), near McCormick Place, which it hopes to develop into a hotel complex. (A-420.) Debtor has a long-term lease with the owner of McCormick Place that allows it to use 450 parking spaces, rent-free, at the McCormick Place parking garage until 2203. (A-420-21.)

On February 22, 2008, Debtor signed a promissory note, secured by its real estate, for a $37,127, 667.03 loan from CenterPoint. (A-421.) When the note matured on February 21, 2009, Debtor defaulted. (Id.)

On February 24, 2009, CenterPoint filed a foreclosure action in state court, and on May 28, 2009, the state court appointed a receiver to remediate building code violations that had been found on the Debtor's properties. (Id.)

On May 18, 2010, Debtor filed chapter 11 bankruptcy. (A-420.) At the time, it owed CenterPoint $48,438,758.49 on the note. (A-421.)

On June 2, 2010, CenterPoint moved to dismiss the bankruptcy case or, in the alternative, to lift the automatic stay to allow the foreclosure action to proceed ("stay motion"). (Id.) The bankruptcy court held an evidentiary hearing on the motion and, on September 17, 2010, made oral "findings of fact and conclusions of law to be supplemented [later]." (A-516.) In relevant part, the court said:

Under 11 USC 362(d)(2), relief from stay may be ordered if a debtor in Chapter 11 does not have equity in the property that is the subject of the creditor's security, and that property is not necessary to an effective reorganization.

While I will and do find that the value of the security that is securing the creditor's interest is sufficient to cover the debt claimed by the creditor, the projection by debtor's expert of a large equity cushion cannot be accepted.

While his analysis persuasively showed that the large values he opined should the property at issue be developed for a new hotel would be realistic in that event, the market of potential developers and investors has not stepped forward to invest. . . . (A-516-19.) Ultimately, however, the court denied the stay motion:

Since the value is not declining, and since there is a plan in the offing that can likely be amended to make it confirmable, the motion to modify stay will be denied for these reasons, to be further amplified in . . . more detailed findings and conclusions to made and entered when we have the time to complete that.

The motion to modify stay will now be denied conditionally on, (1) payment of all post-petition real estate taxes; (2) taking all steps necessary to maintain the properties so as to comply with city building codes and protect the creditor from any priming lien by the special receiver; and, (3) prompt amendments to the proposed plan . . . . (A-520.)

On September 28, 2010, the court issued an order, nunc pro tunc September 17, 2010, on Centerpoint's stay motion, which states:

[A]fter reviewing the argument, evidence, and pleadings presented by CenterPoint and the Debtor, as more completely described in the transcript of proceedings before this Court on September 17, 2010 (the "Ruling"), which the court shall supplement in a subsequent written ruling (the "Written Ruling") . . . , Centerpoint's Lift Stay Motion is conditionally denied for the reasons identified by the Court, and on the conditions set forth, in the ruling from the bench . . ..

CenterPoint and the Debtor are hereby ordered to perform all of the acts required in the Ruling including without limitation (i) the Debtor's timely payment of property taxes and repairs to its properties as required by the City of Chicago, without allowing CenterPoint's collateral to be charged . . . . (A-452.)

On October 29, 2010, the court issued written findings of fact and conclusions of law on CenterPoint's stay motion. (See A-420-28.) Among other things, the court said:

. . . . In this case, it is clear that Debtor does have an equity cushion. Contrary to some comments in the original oral remarks from the bench, based on the evidence it is a large equity cushion but of uncertain protection for reason stated below. Debtor's expert opined that the value of the Olde Prairie property was $15,300,000.00 and the MPEA's pre-condemnation offer to purchase that property for $17,7000,000.00 gives credence to that opinion. Regarding the Parking Lease, the Letter of Intent from LAZ persuasively shows that the relevant market for possible uses of the property values the Lease at ...


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