Individual lenders pull CA Ventures into string of lawsuits as firm seeks liquidity

In April, Tom Scott’s CA Ventures was hunting for a private equity firm that would provide a $10 million unsecured loan on a five-year term to his Chicago-based multifamily development company — and the CEO was willing to personally guarantee he would cure any defaults.

The reason? CA Ventures, which claims to have assets valued at more than $15 billion, needed to pay back a total of $10 million plus interest owed on loans from a Chicago couple, a Houston-based investor and other individuals.

But CA Ventures either never closed on the loan from a private equity firm or, if it did, has something else in mind for the proceeds other than paying back the smaller individual lenders, according to a string of multiple lawsuits those lenders filed this month in Cook County court.

Among the individual lenders are Robert and Linda Finkel of Chicago, who loaned a total of $4 million to a CA Ventures affiliate named in the lawsuit as CA Residential Holdings Company, an LLC tied to CA Ventures CIO John Diedrich. Houston-based Leon Brener also loaned CA Ventures $4 million, and a person named Alan Grossberg loaned it $2 million. All of the separate deals were struck between late 2021 and early 2022.

It’s unclear why a developer of CA Ventures’ apparent size turned to individuals rather than financial institutions or other businesses for such sums of debt; the firm was established in 2004 as a developer of student housing and has since branched out into senior housing and other multifamily and commercial development projects.

CA did not respond to multiple requests for comment made to its leadership and counsel.

The lawsuit shows Linda Finkel allocated some of her loan on terms that required CA Ventures to distribute proceeds from a construction loan or any sale and eventual revenue of a long-stalled luxury apartment development site in the Atlanta area, where demolition work was approved to begin as of earlier this year, according to published reports.

Another portion of her loan, as with the others, included terms that showed the money was a capital contribution to CA Residential, which would use it to fund development and construction costs for projects currently underway or to be developed in the future, the suit shows.

Forbearance agreements that the small-money lenders reached with CA Ventures in April this year show it was working with outfits referred to in an exhibit document as Franklin Park Capital and Peninsula. CA Ventures apparently sought to obtain an unsecured loan of $10 million at a 15 percent annual interest rate and a five-year term, in order to pay back the quartet of lenders. Documents included in the lawsuit show that CA Residential Holdings had another $37 million in outstanding debt when the forbearance agreements were struck in April.

None of the individual lenders who are suing in Cook County nor their attorneys have responded to requests for comment on the matter.

The lenders filed suits this month after saying CA Ventures defaulted on the forbearance agreements, which required payments of about $4 million in total principal and interest by July 20, according to the suits.

The lenders are asking the court to enter a confession of judgment for the amounts they say they’re each owed, which totals nearly $12 million after interest and fees have swollen CA’s cost of the debt under the loan terms, the complaints said.

Hearing dates have not yet been set for the cases, according to online court records.

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