• Data Center Can’t Stop Foreclosure Virus on Building

    A data center southwest of downtown Chicago is undergoing the foreclosure process after missing mortgage payments since February 2011.

    Cole Taylor Bank says the owners of the 107,000-square-foot data center at 601 W. Polk stopped making debt-service payments in February and is behind on property taxes according to a suit the bank filed in May. To date, no foreclosure help has been sought by the owners.

    The property is owned by ventures of Richard Beston and John Branch, principals of investment banking firm Rainmaker Financial Group Inc. In 2006, they purchased the center for $9 million with an affiliated private-equity company, Ten X Capital Partners. They financed part of the purchase with a $5.4 million loan from Cole Taylor according to property records.

    The property at 601 W. Polk, also known as Chicago Media Center, is 60% leased and generates enough cash flow to service its debt. However, the property could use some renovations according to Christopher Jensen, a principal with Chicago-based Digital Capital Partners LLC.

    Cole Taylor’s lawsuit states the property’s 2006 loan was modified six times between January 2007 and November 2010. Another $1.5 million was added to the loan which puts the total balance due to $6.25 million.

    The suit seeks to collect on a guarantee given by RM Advisors, a venture managed by Beston and Branch. Ten X Capital Partners III LLC is also a defendant.

    Benjamin Brand Services – Chicago foreclosure attorney

  • Fashionable Deb Shops File for Chapter 11 Bankruptcy

    Deb Shops, a retailer of young-women’s clothing, filed for Chapter 11 bankruptcy protection on June 27, 2011. The senior lenders are taking over operations, nearly four years after the company was purchased by Thomas Lee.

    A group of firms led by Cerberus Capital Management’s Abelco Finance unit is taking over the company through an offer known as a credit bid. Lenders convert the amount owed to them into equity via the credit bid.

    The bid from the lenders is called a stalking-horse proposal. The proposal opens up a court-supervised auction for the purchase of Deb Shops. If Abelco wins the bidding, they will close on the deal in September 2011.

    Mr. Lee’s investment firm, Lee Equity Partners, is to retain an ownership stake in Deb under the terms of the sale agreement. Lee Equity purchased Deb in July 2007 for a price tag of $395 million.

    Deb Shops and other store operators ran into financial difficulties in 2008 as the credit markets tightened and consumers slowed down their spending.

    Deb is insisting that the bankruptcy filing and subsequent sale won’t affect its day-to-day business. Current management is staying and vendors are being paid.

    Deb’s chief executive Mark Hoffman stated, “This is strictly a financial restructuring of Deb Shops business and we foresee no impact on our operations as we proceed through this process.”

    Benjamin Brand Services – Chicago bankruptcy lawyer

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