Chicago Hotelier Files Bankruptcy to Pause Big Foreclosure

Veteran Chicago hotelier Su-Mei Yen appears to be desperate while facing a $187 million foreclosure lawsuit brought by lender Acore Capital for South Loop developments.

Hinsdale-based Yen late last week filed for Chapter 11 bankruptcy protection for 18 companies tied to the two-hotel development at 1100 South Michigan and 1101 South Wabash avenues, public records show. The move came just before a Monday afternoon court hearing at which Acore was set to argue to have a receiver appointed to overtake management of Yen’s properties. The bankruptcy filings likely pause any foreclosure proceedings against her and her firms, at least for now. Requests for comment weren’t returned Monday by Su-Mei Yen and her attorneys, nor Acore and its attorney.

San Francisco-based Acore filed the $187 million foreclosure suit in August in Cook County court.

Yen’s firm, SB Yen Management Group, developed the hotel properties in 2018. They consist of the 172-room Best Western Hotel on Michigan Avenue, which was renovated in recent years; as well as the Homewood Suites by Hilton on Wabash Avenue, which includes 196 hotel rooms, and a separate 85-room extended stay suites section, plus ground-floor retail.

According to court filings, Yen’s companies oppose Acore’s request for a receivership over the properties, claiming such an appointment would be “catastrophically injurious to their operations.” A receiver’s appointment could force franchisors for Yen properties to impose an “onerous” property improvement program which could cost $15,000 per room for a total of $7.5 million, minimum, in additional expenses for the hotel companies, the filings said.

Acore, however, decried Yen’s claims in court filings, pointing out the lender has provided “millions of dollars” in additional funding to her companies to cover basic expenses, including payroll. Meanwhile, the Yen entities, according to Acore, have “even admitted to diverting funds from the hotel businesses to pay off other creditors, a blatant violation of the loan documents.”

Yen and her daughter, Cassie Yen, are also facing three separate lawsuits filed over the past year in Cook County court, brought by investors who say they poured nearly $50 million into the property’s development entities led by the Yens through the federal EB-5 program. The program offers visas to foreign financial backers of real estate projects.

In one of the cases, the Yens argued the EB-5 investors’ complaint should be dealt with in arbitration. A Cook County judge agreed, pausing on that lawsuit until private negotiations either resolve the parties’ differences or break down and force them back to court. The court is awaiting responses from the Yens in the other two EB-5 cases, the latest of which was filed in January.

Several of the SB Yen entities seeking bankruptcy protection listed between $100 million and $500 million of liabilities owed to between 200 and 999 creditors, and the same amount of value in assets. Among the largest unsecured creditors listed by one of the entities are the city of Chicago, which is owed more than $1.7 million; and the Illinois Department of Revenue, owed more than $1.6 million. Combined, Hilton, the Cook County Department of Revenue and Best Western International are owed just under a collective $1.7 million.