A New York-based lender filed a lawsuit last week against CA Ventures in Cook County for failing to fully repay a loan on time, the latest setback for the Chicago-based multifamily and student housing operator.
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According to the lawsuit, New York-based Spring Tower LLC lent $2.2M to CA Ventures in January 2020, but CA Ventures defaulted on the note by failing to pay the loan's principal and accrued interest by a revised maturity date of Sept. 30, 2023.
On Oct. 2 of that year, the lawsuit says the company made a partial repayment of $2M, leaving a remaining outstanding balance of about $600K.
After CA Ventures made its partial payment, the lawsuit says it failed to repay any more of the outstanding loan. Representatives for Spring Tower sent a formal demand for the remaining balance in August 2024, according to the lawsuit.
“Neither [housing arm] CA Residential nor CA Ventures made any payments to Spring Tower, LLC after Plaintiffs made demands on August 15, 2024,” the suit says.
Factoring in unpaid principal and accrued interest, Spring Tower is suing CA Ventures for about $680K. Court documents don't specify what project CA Ventures received the loan funds for, and the lawyers involved in the lawsuit didn't respond to requests for comment before publication.
The lawsuit against CA Ventures is the latest in a string of legal challenges the embattled company is fighting in the U.S. and Europe.
Late last year, the company said in a letter to investors that it was liquidating its European business after a deal to sell its overseas investment platform to an overseas bank fell through following months of negotiations. CA Ventures was attempting to sell its European student housing platform, which managed 7,000 beds and held planning permissions for another 5,000, to GFH, a publicly traded investment bank out of Bahrain.
GFH signed a term sheet in the summer but ultimately decided not to invest, citing valuation declines and residual liabilities, according to the letter.
In October, a group of investors filed a lawsuit against CA Ventures and two of the company's top executives, CEO Tom Scott and former Chief Investment Officer John Diedrich, alleging the execs misrepresented their intentions for spending investor dollars. The lawsuit says the pair told investors they would use the money to back developments, but instead they used funds to repay maturing loans they had made personal guarantees to pay off.
CA Ventures is also facing up to three foreclosure lawsuits on North Side multifamily properties in Chicago after falling behind on debt repayments, in addition to legal scuffles elsewhere.
In April, former executives got into a dispute over whom the company is obligated to pay first after exit agreements, which delayed a planned spinoff of CA Ventures' industrial arm. That deal was set to close in early 2024.
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