South Loop shutdown
02/29/2012 10:00 PM
A former alderman won’t get to pay himself a salary out of cash from his bankrupt South Loop condo building, a federal judge said this month.
The building at 1555 S. Wabash, owned and developed by former 1st Ward Ald. Ted Mazola and his partner Gus Mauro, went into bankruptcy at the end of December and has been involved in a rather nasty bankruptcy fight since then.
As the initial stages have played out, Mazola has been fighting to maintain control of the building while preparing a reorganization plan. But the federal bankruptcy court judge who’s been hearing the case, Jacqueline Cox, denied Mazola a request to pay himself and several of his colleagues salaries from the building’s coffers — an expense that would have totaled $36,600 a month.
Two weeks ago, the judge released a budget to guide the project through bankruptcy that would allow Mazola and his colleagues to collect a property management fee and a leasing commission, but not a salary. The judge also didn’t appoint a receiver and is letting Mazola’s company, New West Realty, continue to manage the building.
While he was denied the salaries, he called the judge’s ruling a victory.
“We asked the judge for four things, and we got three out of the four,” he said. “It’s a question, is the top quarter empty or is it three-quarters full? … Our lawyer told us that we were entitled to it, and the judge disagreed. That’s all.”
The judge didn’t comment on the appropriateness of the salary in her ruling, but the venture that holds the project’s loan said it was “an attempt to drain as much cash” as possible from the condo tower, according to Crain’s Chicago Business.
T.J. Sagen, a resident in 1555 S. Wabash who’s dissatisfied with the way Mazola and New West have managed the building, said he’s glad they were denied the pay.
“We didn’t feel that was right. That was money that should be going back into the building and not into someone’s pockets,” Sagen said. “For them to be paying themselves even more money just seems wrong.”
Sagen disputed that the three things Mazola ended up getting were straight-up victories for the former alderman.
“The three things he got are things that he’s being forced to put back in the building,” Sagen said. “Him not collecting the salaries was the big thing.”
Sagen said the building has had ongoing problems with maintenance, including debris falling from the ceiling in the building’s garage. Residents have repeatedly complained to New West about the problems, but nothing’s been done yet, he said.
Because of a wrinkle in the building’s management, they can’t form a condo board, either. Since New West still owns the majority of the building’s units, Mazola’s the president of the building’s condo board by default.
According to the Crain’s story, New West is planning to present its final reorganization plan to the bankruptcy court on April 17.