Shipka sued over personal loan guarantees
(Crain's) — Ronald Shipka Sr. is the latest Chicago developer stung by the housing market, as MB Financial sues to collect about $4.7 million on two condominium projects in Palm Springs, Calif.
The Chicago-based bank is seeking to enforce loan guarantees made by Mr. Shipka, one of Chicago's most successful developers, whose local joint ventures include the 397-unit Walton on the Park on the Near North Side and several towers in Museum Park in the South Loop.
Mr. Shipka, president of Chicago-based Enterprise Cos., did not return a message requesting comment. A lawyer who represented Shipka ventures in connection with the loans before the lawsuits were filed declines to comment.
The loans were issued in 2006 by New Century Bank, a Chicago lender that regulators shut down in April and sold to MB Financial. Mr. Shipka, who began his career as a rehabber on Chicago's North Side, has had a long business relationship with Faye Pantazelos, who was New Century's CEO.
In the larger of the two cases, MB Financial is seeking to collect $3.1 million from Mr. Shipka, who guaranteed a portion of a construction loan used to build a townhouse project in the desert city, according to a complaint filed Aug. 3 in Cook County Circuit Court.
Called Palermo and located north of the trendy Palm Canyon Drive shopping strip, only 117 of the proposed 211 units were completed, according to a Web site for residents in the development.
The revolving $30-million loan went into default in May when the venture building the project did not make required interest payments, the complaint says. The balance due was $13.2 million on July 30, the complaint says.
Separately, the bank is seeking to foreclose on the unsold portions of the development, the complaint says. How many units remain unsold could not be determined.
The bank is also seeking to collect $182,000 from two investors, Richard C. Erdenberg and Timothy R. Otten, who owned Chicago residential real estate brokerage Erdenberg Otten & Associates until they shut it down in the middle of the last decade.
The duo, who also allegedly guaranteed a portion of the loan, did not return a call requesting comment. A Chicago lawyer who has represented Messrs. Erdenberg and Otten on other matters did not return messages requesting comment.
In the other case, filed Aug. 5, MB Financial is seeking to collect about $1.6 million from Mr. Shipka, who guaranteed a portion of a $3.6-million loan on a 7.1-acre development site near the Palm Springs Convention Center, about three miles south of the Palermo complex.
Five condos were built on the site, which was zoned for 81 units, according to a Palm Springs zoning document and a brochure advertising the site for sale.
That loan also went into default in May when the venture that controls the site did not make required interest payments, according to the complaint, also filed in Cook County Circuit Court. The balance due was about $3.2 million on July 26, the complaint says.
