The company, a subsidiary of Maritime Trust of Chicago, filed for Chapter 11 reorganization in U.S. Bankruptcy Court in the Northern District of Illinois, saying it owes creditors between $10 million and $50 million. A list of its top 20 unsecured creditors shows that it owes them about $6.9 million.
The list includes the port, which is owed more than $1 million as payment for money it didn't receive in rent when it razed many of the buildings in the area.
"I'm sad the whole thing seems to have fallen apart," said Phil Bannan, port commission chairman. "These guys were good guys and they worked with us pretty well."
The port teamed up with Maritime in 2000 in a deal in which both parties would spend money and share the profits. Maritime developed plans to build as many as 660 waterfront condos and a mix of commercial and office buildings. The port agreed to build the utilities and public walkways and spaces, a boatyard for marine-related businesses, a new port administration building and a marina for large boats.
The marina is completed, the boatyard is under way, the administration building is planned but not completed, and many of the utilities are ready. The buildings still await private financing.
Maritime was to have made its $1 million payment at the end of April but asked for more time because it's been unable to secure money for the project.
"There are not two pennies of financing around these days," Bert Meers, Maritime Trust president, told The Herald two weeks ago. "We're scraping around for the million dollars. Who knows what's going to happen."
The port notified the company that if it didn't pay in a month, it would be in default of its contract, meaning the port could cancel the agreement and get a new developer.
The agreement gives Maritime until 2011 to start working on the condos and other buildings.
"I'm not totally surprised," Port Commissioner Connie Niva said of the bankruptcy. "We anticipated that was a possibility. They simply got caught in the same ruckus of this credit crunch like everybody else."
Niva noted that the port has "a great piece of property" that she is certain will be developed as the economy improves.
"I don't think there will be anybody new knocking on our door right away," she said. "But I'm very optimistic that the property will be very desirable."
John Mohr, the port's executive director, agreed.
"We do have a fantastic project," he said. "We've done the environmental cleanup, we've gotten the zoning changes and we have a boatyard that is the most environmentally sound on Puget Sound."
The bankruptcy doesn't mean Maritime's project is dead, Mohr added, noting that a Chapter 11 filing is for reorganization.
"We'll still have to make sure that Maritime Trust has every opportunity to work through the bankruptcy," Mohr said, adding that the court proceedings could take a year or more.
He said he doesn't know how many people had put down deposits to buy a condo, but that the last number he'd heard was 51.
Port lawyer Brad Cattle said Maritime, not the port, was involved in the condo sales and that he wasn't certain whether the deposits had been placed in a trust account. But he said that's generally how deposits are held to ensure people can get them back.
Both Bannan and Mohr said they're still learning about the port's options and aren't certain of the next step. "I think what we do is we listen very carefully to our lawyers," Bannan said.
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