CHICAGO -- The owner of a Chicago property intended as the site for North America’s tallest building decided to take a $1 million loan from secured lender RMW Acquisition Co. rather than proceed with bankruptcy court approval of an agreement for Atlas Apartment Holdings LLC to invest as much as $135 million.

RMW, an affiliate of Stephen Ross’s real estate company Related Cos., objected to the agreement, calling it “illusory and a sham.” Rather than guaranteeing completion of the so- called Chicago Spire, RMW said it was a “vague, uncommitted, unfunded and discretionary agreement by Atlas to spend up to five months doing due diligence on a dormant single-asset real estate project.”

RMW and other creditors began the case by filing an involuntary bankruptcy in Delaware in October against the owner of the 2.2-acre Chicago parcel, Shelbourne North Water Street LP. In November, Shelbourne consented to being in Chapter 11 and transferring the bankruptcy to Chicago, while gaining the exclusive right until March 10 to file a reorganization plan.

In addition to the investment, Atlas offered to sponsor a Chapter 11 plan paying creditors in full. At last week’s hearing to approve the accord, the owner decided instead to take financing from RMW, according to court records.

On an interim basis, the bankruptcy court approved a $75,000 loan to be used exclusively by a receiver to maintain the property. After a March 11 hearing, the loan can increase to $1 million, again only for use in preserving the property.

RMW argued that the Atlas agreement was highly conditional and required obtaining a $100 million loan from a third party. In addition, Atlas would receive $750,000 to cover expenses of a financial investigation and had the right to terminate the agreement at its discretion within three months.

The Chicago Spire, which was to be built by Irish developer Garrett Kelleher and designed by Spanish architect Santiago Calatrava, was originally envisioned as rising 2,000 feet (610 meters). So far, the 150-story helix-shaped residential project is a hole in the ground.

RMW and the other creditors who started the involuntary bankruptcy said they have $82 million in claims.

Shelbourne borrowed $54.5 million from Anglo Irish Bank Corp. in 2006 to buy the property. The loan was increased to $69.5 million in 2008 and went into default by October 2009. RMW acquired the loan in June from National Asset Loan Management Ltd., which was created to liquidate Anglo Irish Bank.

The case is In re Shelbourne North Water Street LP, 13- bk-44315, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).