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Lender claims Mermelstein triggered personal guarantee on suburban Chicago default
Lender A10 Capital claims New York-based Top Rock Holdings co-founders improperly moved money after failing to comply with $10.8M debt terms
Uri Mermelstein’s lender on a suburban Chicago shopping center is pursuing foreclosure on the $10.8 million property, and may come after the developer’s personal assets, as well.
A10 Capital, an Idaho-based real estate lender, filed for foreclosure on the 138,000-square-foot shopping strip center Melrose Crossing in Cook County court earlier this year, alleging the loan has been in default and Mermelstein’s Top Rock Holdings hasn’t made any payments on the debt since January.
The property is a shopping strip in Melrose Park, a Chicago suburb about 14 miles west of the city.
Top Rock was also required to provide financial documents like rent rolls, quarterly balance statements and tax returns to A10 but did not do so, according to the filing. A10 also states that Top Rock continued to collect rents and keep that money despite being in default on the loan, and spent money out of the mortgage bank account that did not belong to Top Rock, totaling over $1.3 million in transfers and nearly $70,000 in checks. The lender is also seeking payment for over $1 million in interest and fees.
In addition, A10 is alleging Mermelstein and partner Joseph Yshuvayev triggered guarantees that put them personally on the hook to pay off the rest of the loan on which their LLC defaulted.
Lenders usually only seek to collect on personal guarantees following certain moves like a borrower declaring bankruptcy, or, in the case of Yshuvayev and Mermelstein, allegedly presenting misinformed or inaccurate representations to the lender following an event of default, according to the lawsuit.
Mermelstein declined to comment, and an attorney for A10 did not return a request for comment.
Top Rock purchased the 138,000-square-foot shopping center for $11 million in 2019. Founded by Mermelstein and partner Joseph Yshuvayev, Top Rock is mostly active as a developer in New York, but maintains properties across the country. The Melrose Park shopping center is one of four listed on the company’s website. Others include retail centers in Massachusetts, Miami and Colorado.
In July, the company sold its redevelopment of a Queens lot to Medisys Health Network for $10.5 million. The four-story development at 143-02 Jamaica Avenue contains office and medical space in which health network Medisys is expected to be the sole tenant.
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