Loop Office Landlord Enters Bankruptcy as Conversion Looms

The landlord of Chicago’s historic Clark Adams Building has filed for Chapter 11 bankruptcy over a $29 million mortgage on the property, with the team that plans to redevelop it working to take ownership.

A venture led by local investor Musa Tadros submitted a bankruptcy petition in the federal Northern District of Illinois court on July 31, claiming that the entity that owns 105 West Adams Street has assets of less than $50,000, records show.

Tadros and an attorney representing him did not immediately respond to requests for comment Monday. The mortgage is held by Old National Bank, which also didn’t immediately respond to a request for comment.

The Clark Adams Building, also known as the Bankers Building, was named as one of five finalists for the city’s office-to-residential conversion initiative, LaSalle Street Reimagined, in May. The program, brought forward by former Mayor Lori Lightfoot, was conceived to aid the repositioning of financially distressed vintage office assets facing big blocks of vacancy.

The $178 million proposal from Chicago-based developers Celadon Partners and Blackwood Group would convert the Clark Adams Building’s upper floors, which are vacant office space, into 247 apartments, 185 of them affordable housing.

“Our plan is to acquire it as soon as possible and we’re also moving full steam ahead with the city approval process,” Aron Weisner, chief operating office at Celadon Partners, said Monday.

The selection of the finalists for the LaSalle Street Reimagined initiative occurred under former Mayor Lori Lightfoot’s administration; the initiative would require approval from now-Mayor Brandon Johnson’s administration, which hasn’t made a public statement on the status of the program since he took office. And the tax increment financing agreements the participating developers requested in their proposals totaled more than $1 billion, and would need to get signed off by the Chicago City Council.

Tadros has owned the building’s upper floors since at least 2006; the third through 10th floors are occupied by a Blackstone-owned Club Quarters business hotel, which is a distressed property itself and could be set up for a change in ownership after a recent transaction of mezzanine debt tied to the lodging portion of the tower.

In 2020, lender First Midwest Bank filed a $23 million foreclosure suit against the Tadros-led venture that owns the office portion of the property, according to previously published reports.

The property’s receiver put the more than 30 floors of the building Tadros owns up for sale in May 2022, but it hasn’t traded. A judgment of foreclosure was entered in the foreclosure case with First Midwest in December, online court docket records show, but it’s unclear when a lender-controlled sale may take place.

It’s not Tadros’ first time in bankruptcy court in recent months. A Tadros-led venture settled with its lender in the spring over a $23 million loan tied to a South Side shopping center that ended up in default on the debt.