Lillstreet Art Center Credit: Reader file photo

Like so much else in the Trump era, declaring bankruptcy has come to seem like business as usual. After all, Trump’s companies have done it numerous times.

Still, it was a shocker to hear that Lillstreet Art Center, the venerable north-side school, studio, and gallery hub, filed for Chapter 11 earlier this month—especially since the apparent cause of its financial trouble was a dispute with a Web designer.

This week, both the dispute and the bankruptcy were resolved. But in the interim, there was plenty of angst.

Lillstreet, founded in 1975 in a onetime stable in Lincoln Park, now occupies a massive former factory at 4401 N. Ravenswood. In addition to the administrative offices, the building houses 48 artists in studios, 25 classrooms, three galleries, a gift shop, and a restaurant, the nonprofit First Slice Pie Cafe. A nationally recognized urban ceramics center, and one of very few large art centers run as a business rather than a nonprofit, it’s a hub for thousands of students and art makers of all kinds.

So a tiff over Web design brings elephant and flea jokes to mind.

But it was no joke. On March 5, Bruce Robbins, founder and president of Lill Street Inc. signed the bankruptcy paperwork. The news was first reported by Crain’s Chicago Business.

That sent a scare through the Lillstreet community. The center’s communications director, Kate Bek, says she and her colleagues were hearing from so many people afraid that Lillstreet would close that she posted a statement on the center’s Facebook page to reassure them: “[W]e want our community to know that Lillstreet Art Center is not going out of business,” the statement said. “In fact, spring session enrollment is strong. . . .[O]ur directors are already busy planning our fall session and beyond. . . . As we undergo a carefully planned business re-organization, there will be no changes in our operations. We expect to emerge stronger and better than ever!”

Basically, she said, “business is good, and there won’t be any changes you’ll notice.”

So what made a reorganization necessary? Enter the website redesign.

According to the bankruptcy documents, Lillstreet contracted in 2015 with Trilogy Interactive, a national firm with a Ravenswood office, to redevelop its website. The cost was to be no more than $137,050 and work was to be completed by September 5, 2015. By January 15, 2016, Lillstreet had paid Trilogy a total of $110,746, including a retainer fee. Then, according to the documents, “[a] dispute arose between the parties and Trilogy did not complete the new website.” Lillstreet officials declined to comment on the nature of the dispute.

In July 2016, Trilogy sued Lillstreet in Cook County circuit court, seeking an additional $125,000 plus costs and attorneys’ fees. Lillstreet countersued, trying to recover what it had already paid. The case went to a jury trial, and in November 2017, the jury found in favor of Trilogy, awarding it $105,000.

After the verdict, Trilogy filed to recover attorneys’ fees and costs in a notably larger amount: $762,317. Lillstreet asked for a new trial. Then, because of the bankruptcy filing, hearings on the posttrial motions were delayed. (On Monday, Trilogy’s attorney, Saint Charles-based Jotham Stein, declined to comment on the case.)

In a situation like this, bankruptcy can be a protective strategy, allowing a business to continue operating while it pays off or settles its debts over time. (According to the filing, Lillstreet’s assets are between $100,000 and $500,000 and its liabilities are between $500,000 and $1 million.) It’s also worth noting that, according to the filing, Lillstreet’s largest creditor is its landlord, Robbins Management, which is owed $234,000 in past-due rent. Robbins Management is owned by Bruce Robbins and other investors.

Last week, a constrained Robbins said he couldn’t comment on any of this except to say, “We’ve been in business 43 years, and our mission has been pretty much remained the same. We’ve grown, but we’re still a community place, and I think we’ve been pretty successful at it.

“We’re a third place in the lives of a lot of people,” he added. “There’s home, there’s work, and there’s the community at Lillstreet.”

But on Tuesday this week, Robbins was breathing easier. In the words of Lillstreet’s bankruptcy lawyer, Jeffrey M. Schwartz, reached by phone Tuesday morning: “We’ve reached a settlement with Trilogy that will allow us to dismiss the bankruptcy case and continue focusing on our business and operating in the ordinary course of business.”

In the end, Lillstreet agreed to pay $195,000 to Trilogy.

Translation: This bankruptcy’s not going to get baked. v