Kohan Successors Face $112M Bond Vote Over Chicago Tower

Israeli bondholders are scheduled to vote Thursday on whether to accelerate roughly $112 million in debt that ousted investor Mike Kohan raised on the Tel Aviv bond market, a move that could trigger seizure of Chicago’s 65-story tower at 311 South Wacker Drive along with seven regional malls pledged as collateral, according to The Real Deal.

Amos Luzon, the Israeli businessman whose firm took control of the British Virgin Islands-based Kohan Properties Ltd. after Kohan’s bond proceeds were reported to have been misused, is backing new CEO and CFO Ran Daniel, who assumed the dual role after Kohan’s September ouster. Days before the vote, Daniel and Luzon issued a statement promising “steady progress” on the firm’s eight struggling regional malls, seven of which are pledged to the Israeli bondholders. The trigger for the proposed acceleration is straightforward: Kohan Properties changed hands without bondholder consent after Kohan’s own interest in the company was seized by a creditor over a separate loan default, which the outlet reports Israeli bond market filings characterize as an alleged breach of the bond agreement. Bondholders have two options on the ballot: accelerate the debt and demand immediate repayment ahead of its 2030 maturity, or amend the agreement.

The case adds to a turbulent stretch for the Chicago properties Kohan assembled. In our Oct. 24 coverage, we identified Kohan Retail Investment Group as the deeply discounted buyer of 131 South Dearborn Street, the former Citadel Center, inside the same BVI ownership vehicle a British lender seized and resold on Oct. 8 to Luzon’s firm and partner Alpha Gidurim for $6.4 million. That Dearborn Street tower is not collateral for the bonds at stake Thursday, but The Real Deal reports it is separately being contested in a lawsuit filed last week alleging Kohan wiped out a $20 million stake in the building with an unauthorized transfer.

Why it matters

A bondholder vote to accelerate debt would put a 65-story occupied Loop tower into immediate collateral-seizure territory, a reminder for lenders and investors underwriting Chicago office debt that ownership-change clauses in cross-border bond agreements can move faster than a conventional foreclosure.

The numbers

The vote covers roughly $112 million in traded bonds originally maturing in 2030. Collateral at stake includes the 65-story 311 South Wacker Drive tower and seven of Kohan Properties’ eight regional malls nationwide.

What’s next

Senior bondholders convene Thursday at 4 p.m. Israel time, 9 a.m. Chicago time, to vote on accelerating the debt. A vote to accelerate would instruct a trustee to move toward seizing the pledged malls and the Wacker Drive tower; a vote to amend the agreement would leave Daniel’s turnaround plan in place. Track the Loop’s distressed office towers at Chicago.