ALGONQUIN – The developer of Riverside Plaza filed for Chapter 11 bankruptcy this week and said the filing would have no effect on the operation of the apartment building.
John Breugelmans of Riverside Plaza Developers LLC said he filed for Chapter 11 bankruptcy March 14 because it allows him to restructure a plan to repay secured debt that is owed to a construction lender.
Bruegelmans’ attorney, Neal Wolf of Tetzlaff Law Offices in Chicago, said the developer owes construction lender UCF 1 Trust 1 of Boston more than $13 million.
Bruegelmans said the lender had become “extremely demanding” and was asking for money to be repaid at unreasonable rates. He said the filing was a protection against bankruptcy, and will protect Riverside Plaza from court actions and force the lender to come to the negotiation table.
“It will be totally transparent. We have already prepared the plan for reorganization,” Bruegelmans said. “There’s no effect whatsoever on any part of the project. ... We have more than adequate cash flow from the operation of the building to just continue as before. We are not in a financial debacle.”
Wolf said he and Bruegelmans met with representatives from the village Wednesday and it was “brief and pleasant.” Community Development Director Russ Farnum said the developer was still in good standing with the village and had fulfilled what has been asked of him.
Bruegelmans said Riverside Plaza is about 75 percent occupied and he anticipates that number rising to about 80 percent based on prospective renters.
Bruegelmans also said the dispute with this lender had stalled progress on selling retail space on the first floor of the building. He said 70 percent of the spaces have been allocated to a restaurant, a cafe and an office suite, and with the bankruptcy filing in place, he will sign letters of intent soon.
Adam Stein-Sapir, who specializes in analyzing bankruptcy cases at Pioneer Funding Group LLC, said this type of reorganization is not uncommon and setbacks in construction, along with the fact that planned condos were converted to apartments, likely contributed to the financial issue.
“I don’t think residents should be worried about coming back and suddenly the lights are off,” Stein-Sapir said.