Who Wants to Build the Chicago Spire?

Any interest in getting a new Chicago skyscraper off the ground so it can claim the title of tallest building in the Western Hemisphere? If so, now may be your chance.

It came out in bankruptcy court Wednesday that the developer of the Chicago Spire, led by Irishman Garrett Kelleher, wants the ability to shop around for a partner who might offer a better deal than the $135 million pledge currently on the table from Atlas Apartment Holdings LLC.

“Mr. Kelleher wants to build this Spire,” said Joseph D. Frank, the attorney representing the developer in its Chapter 11 case, referring to the 2,000-foot-tall, Santiago Calatrava-designed tower that was thwarted by the economic downturn.

“Everyone on the face of the earth knows that,” U.S. Bankruptcy Judge Janet Baer replied.

However, the developer’s agreement with Atlas doesn’t currently allow competition, so Atlas is asking for a higher breakup fee in return for losing its official status as the exclusive deal on the table.

The proposed breakup fee increase—to $6.75 million from $3.75 million—wasn’t before the court Wednesday but dominated the hearing anyway, as Atlas defended its request from Related Cos., which holds the project’s secured debt.

“To try to extract that at this point is unreasonable,” said Related attorney Lenard Parkins. “They haven’t earned it.”

Atlas attorney Douglas Bacon assured Judge Baer that Atlas and the developer “are in sync on this. It’s not a pressure situation.”

Questions arose at the hearing about whether Atlas had secured the financing commitments it needs to meet its $135 million pledge, and Mr. Bacon also sought to provide assurance.

“Atlas believes it can satisfy the court that it has a commitment,” Mr. Bacon said, though he declined to say more, citing “the press in courtroom.”

The dispute over the breakup fee threatens to hold up the Spire’s debt-restructuring plan, at least in the short term, as the developer, Atlas and Related aren’t in agreement as to whether the plan can go out for a creditor vote before the breakup fee dispute is resolved. Attorneys are taking the day to work out their differences and will return to bankruptcy court Thursday afternoon.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter at @PalankJ.