A Chicago suburb’s convention center project corporation entered chapter 11 bankruptcy on Friday, starting a court-supervised process to settle a $183 million municipal default, the Wall Street Journal reported today. Lombard Public Facilities Corp., a public financing entity in the village of Lombard, Ill., entered court protection having already hammered out a restructuring deal with its largest creditors, municipal bond giants Nuveen Asset Management LLC and OppenheimerFunds Inc. The corporation’s $183 million in debt was issued to finance an 18-story building project that opened in 2007 with a Westin-branded hotel, convention space and restaurants. The catalyst for the bankruptcy was the village’s refusal, starting in late 2011, to appropriate funds to cover shortfalls between what the project generated in revenue and the scheduled payments due to bondholders. Reserve funds covered LPFC’s debt obligations until January 2014, when the municipal debt fell into default, trashing the credit ratings of both the village and the bond issuer. Counting accrued interest and principal, the outstanding balance has ballooned to $247 million, according to court documents.
