Banks are seeking control of a house and a St. Paul shopping center tied to the widow and business partner of a former downtown real estate titan after their company, Madison Equities, fell into financial distress.
When Jim Crockarell died a year ago, Rosemary Kortgard was left as St. Paul’s largest property owner. The couple had expanded the Madison Equities portfolio through the decades to include some of the capital city’s most recognizable buildings.
Many of those properties are now embroiled in litigation for defaulting on mortgages and other loans, a number of which Kortgard guaranteed personally. New documents and testimony in a bankruptcy court hearing last week provided a glimpse at interactions among the many entities affiliated with the Madison Equities properties.
Earlier this month, Merchants Bank asked a judge to appoint a receiver to manage Kortgard’s North Oaks house through the foreclosure process. The complaint alleged that Kortgard defaulted on her mortgage by failing to make timely payments.
Another lender, Minnwest Bank, is fighting for the right to foreclose on Kortgard’s Hillcrest Center subsidiary, which filed for Chapter 11 bankruptcy in December on the eve of a potential receivership order.
The East Side shopping center, on the 1600 block of White Bear Avenue, might be one of Kortgard’s few profitable properties. Unlike many of the others, the building was paying its taxes and making principal and interest payments.
Still, Minnwest claimed Hillcrest’s $6 million in loans were in default for several reasons, including an adverse change in Kortgard’s financial position. The bank is asking a judge to dismiss the bankruptcy case, arguing it is Hillcrest’s sole creditor, so there is no debt to reorganize.
The balance sheet for Hillcrest also lists more than $2 million owed to Kortgard and her other entities, which the attorney for the bank characterized as fraudulent transfers.