Coffee Creek Development I LLC (CCD)—a joint development partner of the Lake Erie Land Company—is in default on an $11.9 million loan.

That’s the contention of a lawsuit filed on May 19 by Old Second National Bank of Chicago Heights, Ill., which is seeking, among other things, a judgment in that amount as well as a foreclosure order on property held by CCD and others.

According to the suit, on July 8, 2008, CCD obtained a loan from Old Second National in the amount of $11.9 million and two letters of credit, one in the amount of $140,804, the other in the amount of $98,802. To secure that indebtedness, CCD mortgaged two separate parcels of real estate on Oct. 17, 2008.

On Jan. 10, 2010, however, the $11.9 million loan matured and CCD has not paid it, is in default, and in principal, interest, costs, and late fees now owes Old Second National a total of $12,088,683, the suit alleges.

With CCD’s default on the loan, the two letters of credit are also in default and Old Second National is entitled in addition to be paid for all draws made on them, the suit further alleges.

Old Second National is seeking the following:

•A judgment in the amount of $12,088,683; all draws on the letters of credit; and interest since March 31, 2010, attorney’s fees, and collection costs.

•An order declaring the two mortgages to be both valid and superior to any other claims, liens, or interests asserted against the property in question.

•An order foreclosing CCD’s interest in the property and barring the rights of all other defendants in that property.

•And an order directing a sheriff’s sale of the property as separate parcels to satisfy Old Second National’s claim, at which sale the bank would be empowered itself to bid on the property with the full indebtedness owed the bank credited to any bid.

Also named in the suit as defendants—“to answer” as to their own “interests” in the property in question—are the Lake Erie Land Company, the Coffee Creek Center Homeowners Association, the Coffee Creek Center Commercial Association, the Sand Creek Homeowners Association, the First Bank and Trust Company of Illinois, Centier Bank, Sand Creek Country Club Real Property, and Gierczyk Holding Company.

Posted 5/25/2010