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New York-based debt firm is escalating its battle with Chicago developer Scott Goodman over a West Loop real estate loan tied to the city's migrant crisis. Knighthead Funding has filed a second lawsuit against Goodman and his partner A.G. Hollis, alleging they defrauded the lender by kicking out office tenants to sign a lease with a migrant shelter operator. The property at 344 North Ogden Avenue is jointly owned by Goodman and Hollis through an LLC.

    The new lawsuit seeks to have a third-party receiver appointed to take possession of the property and oversee its management while the legal disputes play out, followed by an auction where Knighthead can credit bid up to $11.5 million. The lender claims Goodman and Hollis spent months dodging demands for documentation about the migrant shelter deal, which is generating $150,000 per month in revenue.

    The lawsuit reiterates claims that the landlords have missed loan payments since September and breached their contract with Knighthead by entering into the migrant shelter deal without approval. Goodman and Hollis had previously argued that the building's previous use as an office space became financially unviable during the pandemic, but they saw the migrant shelter opportunity as a way to bring in solid cash flow.

    The second lawsuit puts the property on track for foreclosure auction if Knighthead prevails. The first case could result in Goodman and Hollis being required to repay the debt if they are found to have defaulted.