Legacy Re, Ltd. v. 401 Properties Limited Partnership: Date Argued: February 10th, 2026; Docket Number: 1-24-1341

Case Summary:

Gemini said

In the case of Legacy Re, Ltd. v. 401 Properties Limited Partnership (Docket No. 1-24-1341), which was argued before the Illinois Appellate Court, First District on February 10, 2026, the relevant facts are as follows:

The litigation originates from a complex commercial foreclosure action involving a $15 million commercial property located at 401 S. LaSalle St. in Chicago.

The dispute involves two separate mortgage notes issued in 2009: a $7.9 million note held by Bridgeview Bank Group (BBG) and a $3.2 million subordinate note originally held by Fortuna Stream LP.

The petitioners, Legacy Re, Ltd. and Rock Solid Gelt Limited, are partial assignees of the Fortuna note and initiated foreclosure proceedings after the borrower, 401 Properties Limited Partnership, defaulted on the debt.

A central factual issue in the case is the "merger doctrine," which the trial court applied after finding that the same individuals controlled both the debtor partnership and the entity that later acquired the senior BBG mortgage.

The trial court previously ruled that because the same principals (Leon Greenblatt, Andrew Jahelka, and Richard Nichols) sat on both sides of the transaction as creditor and debtor, the senior mortgage was effectively extinguished.

The current appeal, docketed as 1-24-1341, follows a long procedural history involving multiple bankruptcy filings by the debtor that were dismissed for being filed in "bad faith" to delay the foreclosure.

The factual record on appeal includes challenges to the trial court's imposition of a constructive trust for the benefit of Rock Solid Gelt Limited over its share of the mortgage proceeds.

During the oral arguments on February 10, 2026, the appellate panel examined whether the trial court erred in its factual finding that a "double recovery" would occur if the mortgage debts were not cancelled through the merger doctrine.