CHICAGO -- Holders of ChicagoCalumet Skyway bonds and the city of Chicago ended 22 years of litigation yesterday when a federal judge dismissed a lawsuit over the toll road's bond default.
Meeting in U.S. District Court Judge James Moran's chambers, attorneys for the two sides agreed to the dismissal in the wake of a May 24 refunding of the skyway's $90.2 million of outstanding revenue bonds, which effectively made moot the skyway bondholders' lawsuit against the city.
The refunding allowed the city to redeem the bonds and end a default that occurred in 1963 due to a lack of sufficient traffic on the toll road.
Attorneys who had fought in court over toll increases and bond redemptions praised the judge and each other for ending the default.
"It's much easier to say nice things about everyone when things turn out right," Moran said.
He said that the case was the oldest pending before the federal court in the Northern District of Illinois.
The litigation was scheduled for dismissal on July 11, but was postponed to give bondholders more time to redeem their bonds. At the time, about $76 million of bonds had been redeemed, leaving about $14.6 million of bearer bonds unredeemed.
Gall Niemann, the city's deputy corporation counsel, said another $1.6 million of bonds have since been redeemed, leaving about about $13 million of bonds unredeemed.
Ken Purcell, an attorney at Winston & Strawn, which represents the bondholders, said yesterday that another postponement of the lawsuit's dismissal was not necessary given efforts by the city and American National Bank, the depository for the bonds, to reach skyway bondholders.
"We could wait 10 years and there still could be money outstanding," Purcell said. "The bank and the city have been diligent in notifying bondholders about the redemption and we have every confidence the bank and the city will continue to pay those dollars out as bondholders present their bonds."
Niemann said the city and the bank have run redemption notices in The Wall Street Journal and the Chicago Tribune and that the bank has mailed notices to those bondholders who had converted their bearer bonds to registered bonds.
An attorney representing the bank has said that there is no record of who owns the bearer bonds and that the bonds would have to be submitted to the bank to be redeemed. The attorney also has said that the bank is required to keep the bond proceeds for seven years starting from July 1, the date of redemption. After that, any remaining money would be turned over to the state of Illinois, and bondholders could then get their money from the state.
Chicago sold $88 million of revenue bonds in 1955 and another $13 million of bonds in 1957 to build the 7.8-mile toll road that connects the southeast side of the city with the northwest corner of Indiana.
Bondholder litigation, which began in 1972, resulted in some court-ordered toll increases on the skyway. The city caught up with past due interest on the bonds in 1989 and redeemed $10.8 million of bonds through a court-ordered tender offer in 1991.
On May 4, attorneys for bondholders agreed to dismiss the litigation contingent on Chicago's issuance of 30-year current refunding bonds to redeem the remaining $90.2 million of bonds at 101% in accordance with bond ordinances. The original skyway bonds were due to mature on Jan. 1, 1995.