The commercial property at Marina City slid into bankruptcy in 1988 and for the next 12 years, its court-appointed caretaker was Ilene F. Goldstein, an attorney from Highland Park north of Chicago.

“Marina City saw me through my engagement and my marriage, the birth of my first and second child,” mused Goldstein in 2011, “and I used to joke with my husband it will probably see us through our divorce.”

After filing for Chapter 7 bankruptcy on November 18, 1988, Marina City Associates, led by Ellison Trine Starnes, Jr., no longer had control over the commercial property at Marina City. Goldstein was appointed to step into his shoes and find money to pay back dozens of creditors, from a Chicago locksmith that was owed $296 to Continental Savings Association, owed $16.5 million.

As trustee, Goldstein would work to liquidate the assets of Marina City Associates, to sell the commercial property to a third party who would, hopefully, make it more valuable. But with people living in a condominium community that had no official involvement with the bankruptcy case, Marina City could hardly be closed down.

“It’s like a living, breathing entity,” said Goldstein (left). “There had to be a special order in this case authorizing me to operate even though generally you don’t operate in a Chapter 7, you just close it down and you sell it.” Marina City, she says, was “an anomaly from the beginning” and “a very difficult property to deal with.”

While real estate taxes had not been paid for several years, and Marina City had a huge unpaid mortgage, the property had a more immediate problem – a Commonwealth Edison bill for electric service of between two and three million dollars. The bill on June 2, 1988, for just one month was $142,999. Even though there was not enough money coming in to pay these bills, Goldstein says Com Ed was patient for “a very, very long time.”

Inevitably, though, they had to meet with Com Ed at Marina City’s electrical plant to determine when and how service to the commercial property would be disconnected.

“As luck would have it, this electrical plant was so complicated and so antiquated that Commonwealth Edison and...everyone was afraid to turn it off, because they were afraid of what might happen.” (Right) General Electric equipment, comparable to what Goldstein would have seen, on 19th floor of Marina City’s west tower parking ramp. (Click on images to view larger versions.)

Com Ed would be granted a lien against the property, the value of which was estimated at the time at $30-50 million. By keeping the electricity switched on, says Goldstein, “it wasn’t like they were hurting their bottom line.”

“Obviously, an operating building with electricity, there was a better chance I was going to sell it.”

Deal to turn office building into Fairfield Inn falls through

There was some interest in developing the property, she recalls, and they got one offer for $30 million. But as the economy weakened in the early 1990s, the offer – from Hiffman Shaffer Anderson to build a Fairfield Inn hotel at Marina City and renovate the adjacent commercial property – was withdrawn.

“The whole real estate and travel industry really crashed right in the late 80s and early 90s. Had this case been filed a year before, I think we probably would have sold it for $30 million dollars.”

Instead, the only interest came from what Goldstein calls “the bottom feeders,” scavengers who wanted to buy the property for a very low price. “They probably were the only hope because the property needed so much money just to bring it up to any type of a livable arrangement.”

Among the businesses interested in Marina City, according to Goldstein, were casinos. There were no casinos in Chicago at the time, she explains, and the only way you could have a casino is to build it over water. Conveniently, much of Marina City was built over a marina.

“There was some level of interest of buyers who though they didn’t come out and say it, were kind of kicking the tires to see if they could get a casino there. That doesn’t come out in any of the papers. But the casinos in those days, it wasn’t really something that I wanted to see or that anyone would want to see happening where there were people living.”

Still, they were a motivated seller. The amount of debt, says Goldstein, was “tremendous.” The problem would be fixed either through litigation or agreements. But it would take time.

“Even though my various attorneys probably walked out making some significant money, when you look at it, it took five years of dealing with all these parties to try to put some deal together.”

When Circuit Court Judge Richard L. Curry ordered the mortgage foreclosure judgment on November 21, 1990, it meant the court had determined that the commercial property at Marina City had no value or any way to pay creditors.

“That was clear as a bell here,” says Goldstein. “You can tell by the numbers, with the real estate taxes, with the secured debt, and with the Commonwealth Edison [bill]. And there obviously were other bills but they paled by comparison to the big three.”

However, when Resolution Trust Corporation asked Goldstein to abandon her interest in the property – the death knell of any other creditor’s hope of ever getting paid – she refused. The foreclosure went ahead, Goldstein continued to serve as trustee, and the commercial property languished for another few years.

Living next to bankrupt property

Suffering the most during this time, says Goldstein, were the residents of Marina City. “During this bad time period, the building was very run down.”

She says the condominium association would schedule meetings with her to try to make the property more livable, but at the time Goldstein had bigger problems. “I was dealing with allegations that the bridge was falling in the river and they were asking me to put up a taxi cab light and plant flowers.”

The ramps, leading not over the river but a drop to marina level of 20 to 30 feet, were in such disrepair that they had to be closed for a time. (Left) Photographed in 2007, the entrance ramp to Marina City from State Street.

Eventually, RTC would be told by the court to walk away from its claim, but even before that, Goldstein realized they were not going to do much to collect. “And now instead of the 33, 35, 40 million dollar level, we’re...talking one to three million dollar level. Which clearly isn’t going to pay for the real estate taxes, isn’t going to pay Commonwealth Edison, and clearly isn’t going to pay the secured creditor.”

Goldstein points out that RTC would not have voluntarily abandoned its claim. “I believe that we actually filed a suit against them and we technically won. I can’t remember if we won because they didn’t fight it too hard or they didn’t have the basis.”

There is interest, she says, in getting the property back on the real estate tax rolls, and “getting this blight fixed up for the people who live there and for the...public as a whole.”

Finally a deal and puzzle pieces fit together

In 1993, when there were finally two serious and competing offers, it would be up to Goldstein to decide between John L. Marks and a group led by Roger Levin that included Marina City architect Bertrand Goldberg.

“I felt that the party that was more likely to do something good for Marina City [and] had the financial wherewithal...was this John Marks group. Ultimately, it went up on appeal and Judge [Wayne] Anderson ruled in my favor every which way including Sunday. He issued a decision that basically confirmed what my suspicions were.”

Marks was better capitalized, she believes, and “I also had a sense that...they had a better idea of what they were trying to do.”

Looking back, she says Marks “did a pretty nice job.” She says Marks was “very, very smart” to include Goldberg in the redevelopment.

Although Marks had a contract to buy the property, Goldstein’s work was not over. The three million dollars they would get from him would not be enough to get liens released from the property. She worked with RTC, eliminating their claim entirely, “which was not an easy thing to do,” then got the Assessor’s Office to reduce the real estate tax bill to $750,000, then turned to Com Ed, which was by then owed more than three million dollars.

“We were able to put all these puzzle pieces in place – and unbelievably, had a small amount leftover to pay some of the pre-petition creditors.” She estimates that amount was $100,000 to $125,000.

“Everyone had to work together to seal this deal. Everyone was really trying to get Marina City back on the road.”

Still, no one came out whole. Creditors lost hundreds of thousands of dollars, she estimates, perhaps millions of dollars. Paid a percentage of what she distributed to creditors, Goldstein’s compensation of $90,000 for 12 years of work was modest. “If I had sold the property for $33 million, I could have retired.”