Chicago real estate investor Gerald Nudo allegedly schemed to secretly sell off his business partner’s stake in a joint development project last week but was thwarted at the last minute.
Developer Todd Bryant found out second hand that Nudo planned on Nov. 20 to sell off Bryant’s stake in a Scottsdale, Arizona, development site that the two co-own, a lawsuit filed by Byrant alleges.
Bryant then secured a Hail Mary court order to delay the sale two hours before it was set to take place.
It’s unclear when Bryant found out about Nudo’s alleged plan to sell his stake in the development project, but Bryant sued just two days before the sale. A hearing on the matter is scheduled for next month, with a potential sale rescheduled to Dec. 12, said a representative of the company tasked with organizing the sale.
Bryant, his attorney and Nudo, did not respond to requests for comment.
While the sale stalls, Bryant’s lawsuit is bringing to light an ongoing feud between the two Chicago-based real estate professionals, and it appears to have resulted in a nearly 10-year delay of an 11-building medical and retail development called Sierra Bloom planned for the site. The 43-acre lot remains unfinished, and legal filings allege the partners have so far lost an estimated $25 million due to Nudo.
It’s not the first time in recent years that Nudo and Bryant have had legal clashes with fellow investors and each other.
Nudo previously sued Bryant seeking $317,000 over an allegedly unpaid loan, in a case that hasn’t yet been resolved. And a Colorado-based investor sued Bryant and another business partner alleging they engaged in self-dealing of $5 million worth of shared business assets with Nudo’s help.
Separately, Nudo is facing multiple lawsuits regarding more than $50 million in disputed funds from business dealings related to his Chicago-based commercial real estate firm Marc Realty.
The Sierra Bloom lawsuit
The delayed UCC sale of Bryant’s interest in his and Nudo’s holding company for their Arizona development project marks a new peak in a yearslong feud.
Bryant and Nudo bought the 43-acre Scottsdale property in 2016 with Nudo serving as the financial backer of their proposed Sierra Bloom project. Bryant, who runs a healthcare-focused development firm in Chicago called Healthcare Development Partners, was set to serve as the developer.
The two planned to construct 11 buildings for medical and retail use and eventually lease or sell them all off while maintaining ground leases underneath the properties, the lawsuit claims. Another unnamed investor has a stake in the groundleases.
Bryant and Nudo planned to sell off three development sites by 2022 and the remaining eight by 2025. They expected to earn about $42 million in profit after paying off loans for the project. Bryant expected to receive $21 million of that, the lawsuit alleges.
Instead, Nudo allegedly thwarted multiple offers from prospective buyers and tenants in an effort to deliberately harm their business prospects. To keep their holding company afloat, Nudo refused to accept loans from third party lenders and made Bryant take out loans from an affiliate of his with “exuberant rates,” the lawsuit claims.
With the project on shaky ground, Nudo included in the loan terms that Bryant’s share in the company would be reduced from 60 percent to 45 percent. Once he established a majority ownership in the holding company, Nudo arranged to sell Bryant’s share via the UCC sale. Bryant claims the value of his interest in the company is significantly diminished due to Nudo’s actions and would likely trade for about 5 percent of its market value.
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In addition to asking a judge to pause the sale, Bryant is seeking $25 million in damages from Nudo for breach of contract, breach of fiduciary duty and tortious interference.
Nudo has not yet filed a response.