The fight for control of the Chicago Spire's site is headed toward resolution, after which the hunt for the funds to build it can begin anew.

Shelbourne North Water Street LP, has reached an agreement with key creditors that would resolve the company’s bankruptcy, pay outstanding claims in full and theoretically enable a behemoth project that has sat idle for six years to move forward.

But if all goes according to the proposal laid out during a bankruptcy hearing Wednesday afternoon, it won’t be Irish developer Garrett Kelleher calling the shots in the development of what aims to be the tallest building in the western hemisphere, a residential skyscraper with an estimated construction cost of at least $1.5 billion. Nor will it be Related Midwest, a deep-pocketed residential developer in Chicago that has been at odds with Shelbourne for months – unless Related doesn’t get the monies it is due.

Attorneys for the key parties involved in the bankruptcy unveiled in court the framework for an agreement that would have Atlas Apartment Holdings LLC, a Northbrook-based apartment development and management company, provide the funds necessary to resolve the bankruptcy case.

Post-bankruptcy, Atlas would oversee the development of the Chicago Spire as it was originally intended, a 2,000-foot, 150-story spiral-shaped condominium tower. Kelleher, who just last month detailed in court filings his proposed financial partnership with Atlas, would remain key to the project, according to Atlas CEO Steve Ivankovich.

“Garrett (Kelleher) is still the developer,” Ivankovich said in an interview. “We are building exactly the same building that was contemplated to be built.

“For us, it was always about building the Spire,” he added. “Buying it out of bankruptcy was an interim step.”

Related Midwest, which purchased about $93 million in delinquent debt on the project last summer, forced Shelbourne into bankruptcy last fall, and objected to the Atlas deal last month, would receive $109 million by Oct. 31 for its claims and no longer have any interest in the project. Related Midwest also would get back the interim bankruptcy financing it is providing Shelbourne.

If Shelbourne asks for a six-month extension to pay Related Midwest, it will owe the company more money. If it doesn’t come through with payment then, Related will get the Spire site instead.

“This agreement provides a clear and certain path to resolution,” Related Midwest president Curt Bailey said in a statement. “We are pleased with the outcome which offers certainty of payment or satisfaction of our claim through transfer of the property and a formal timeline for moving the process forward.”

The parties are expected to return to court March 25 with a full settlement agreement to show Judge Janet Baer, who congratulated them for hammering out a deal.

Ivankovich said he will be in “full capital-raising mode” to fund the Spire’s construction and he downplayed any potential zoning issue related to the planned development agreement of the site. Under the current city ordinance, that agreement, dated July 9, 2008, was in place so long as “substantial construction” of improvements to the site was completed within six years.

Work at the site came to a standstill in 2008, and since then it has remained a 76-by-100-foot crater at 400 N. Lake Shore Drive. “Investing $70 million plus into the infrastructure of the foundations is substantial work,” Ivankovich said. “We have every comfort the (planned development) is still there.”

Atlas' portfolio includes 75,000 apartment units nationwide and projects in Great Britain. Most of its U.S. investment is in the Southwest and Southeast.

mepodmolik@tribune.com

Follow @mepodmolik Follow @chibreakingbiz