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Bank of America says Oregon-based Trolley Square Associates, which operates the Trolley Square mall in Salt Lake City, has defaulted on millions of dollars in loans on the property.
As a result, the bank is asking a Utah court to appoint a receiver to step in and take over the operation of the shopping complex.
In a complaint filed in Utah's 3rd District Court, the bank contends the operator of Trolley Square owes it and other lenders $57 million, but failed to pay off the loans when they came due June 1.
Since then, according to the bank, Trolley Square has failed to turn over any of the rents and revenue generated by the shopping center as required by loan agreements that kicked in once the default occurred.
Trolley Square is about to become insolvent, the lawsuit states. It does not have adequate working capital to carry on its normal business operations and doesn't have the money necessary to improve and maintain the property, and that puts the lenders' collateral at risk.
"Because of the defaults ... there is a substantial risk that Trolley Square will not properly maintain and insure the property, will not properly collect and remit rents, will not properly lease or rent vacant units in a commercially reasonable manner ... (and) ... will not act to protect lenders' interest in the property, all to the potential irreparable detriment, harm and loss to lenders," Bank of America alleges.
Sean Bradley, who owns the Tabula Rasa stationery store and nearby Cabin Fever, said he's happy with his space in Trolley Square and has seen no sign that the mall isn't being maintained well.
"Obviously, we [the tenants] would all like to see some more tenants brought in. And that is something that I also hear from my customers," he said. "So from that standpoint, Trolley Square remains a diamond in the rough and getting new tenants in here is something the owners could work on."
Bank of America pointed out its lawsuit does not seek to collect the $57 million, but to protect the preserve the value of the property. That is why it wants the court to immediately appoint a receiver with the power to collect rents and run the shopping center "in a commercially reasonable manner."
Calls to Trolley Square Associates for comment were not immediately returned Tuesday.