Republic Bank Says Sedgwick Properties Defaulted on $52M

Marty Paris of Sedgwick Properties has three high-end residential projects on the edge of disaster.

The Chicago-based developer is fighting with government officials and a bank to stay alive.

In the newest layer of the previously jailed developer’s mounting legal pressure, lender Republic Bank alleged this week that Paris-led ventures missed payments on $52 million-worth of loans tied to residential towers built by Sedgwick in River North and the South Loop.

Paris’ company faces the prospect of losing control of two dozen unsold condos in the 25-story tower Sedgwick built at 1464 South Michigan Avenue, as well as a recently completed 14-story property called The Rhone, at 146 West Erie Street in River North.

Republic Bank of Chicago filed a foreclosure lawsuit in Cook County against the Paris-led entity that owns the condos within the 210-unit South Michigan building, known as the Marquee. The developer took out a nearly $12 million loan in 2022 using condos he still owned in the building as collateral. His firm allegedly missed making property tax payments due for 2022 and 2023, the lawsuit said. Republic put up more than $636,000 to satisfy the tax obligations at the property, which constitutes a default by the landlord, the suit said.

As Republic seeks to foreclose on the condos, it also claims Paris’ firm missed an April payment on its $40 million loan tied to The Rhone, a 14-story, 31-unit building that was repositioned as a high-end rental property after the developer ditched plans for condos starting at $1.3 million. Republic’s lawsuit appears to put Paris at risk of losing that property to the lender, as well.

Leasing brokerage The Apartment Source in April also filed a $48,000 lien against The Rhone property, alleging it’s gone unpaid by the landlord for real estate services. Paris and attorneys representing him haven’t returned requests for comment.

Meanwhile, Paris’ firm in July sued the village government in western suburban River Forest, where he previously lived with his ex-wife, in an effort to get construction permits reinstated for a long-dormant $20 million-plus condo project that was supposed to deliver 22 units. The lawsuit claims the village has wrongly refused to approve building permits. The village revoked a permit after years of delay with the project.

Paris is also trudging through a Chapter 7 personal bankruptcy court case he filed in December to seek protection from creditors, while claiming he had between $1 million and $10 million in assets — which include a handful of Chicago-area real estate and investment accounts — and between $10 million and $50 million in liabilities, court records show.

He sought bankruptcy protection as his ex-wife, Kerry Paris, sought to collect $1.6 million for legal bills that Marty Paris was ordered to pay as part of their messy divorce. He claimed he didn’t have the funds to settle the debts and ended up in contempt of court. A judge threw him in the Cook County jail in December, and Paris came up with hundreds of thousands of dollars toward the debt to secure his release. He has disputed a finding by the divorce court that his net worth exceeds $20 million.

The Sedgwick-owned property in River Forest is also at the center of a foreclosure lawsuit advancing through court. That case, filed by Beverly Bank & Trust, has become complicated by the lender’s recent allegations that a sibling of the developer has filed liens against the property as a tactic to keep a claim to the site alive as the developer faces its potential seizure.

“They want a building permit — we’re not quite sure what they can do with it given the foreclosure action,” Lance Martin, an attorney for the River Forest village government said. “The property is important to the village because it’s right in the middle of downtown.” A spokesperson for the village said officials are aware of the lawsuit and remain committed to attracting a viable development at the Lake and Lathrop site.

Paris notched a victory in March when he successfully argued that a receiver appointed to the River Forest property to manage it through Beverly’s foreclosure proceedings shouldn’t be allowed to market the land for sale. A Cook County judge instructed the receiver to refrain from seeking buyers.

Besides that, Paris’ bankruptcy filing prompted another foreclosure lawsuit earlier this year. Bridge Investment Group is seeking to collect on Paris’ personal guarantee of a $26 million loan for the 69-unit Old Town apartment complex at 301 West North Avenue that Sedgwick developed. Bridge argued that the bankruptcy filing allows the lender to go after Paris’ personal assets.

Republic also mentioned the bankruptcy filing and its continuation after more than 60 days as another reason Paris has defaulted on the South Loop and River North loans.

A hearing in the bankruptcy case was scheduled for this week but pushed to August 9 after a judge ruled the court’s Chapter 7 Trustee could subpoena, inspect and interview financial materials and people tied to nearly four dozen entities over which Paris has control or an investment stake.

Paris’ and Sedgwick’s creditors are still waiting in line to get paid in the meantime.