Chip Norton, owner of Mercantile Center, files for bankruptcy amid lawsuits, $70M in debt

Charles “Chip” Norton, one of the most prominent players in the Central Massachusetts property development world, has filed for Chapter 7 Bankruptcy as five lawsuits have accused him and his businesses of unpaid debts, amid an unprecedented crisis for his billion-dollar real estate empire. 

Norton, the owner of Worcester’s Mercantile Center and the largest commercial property owner in Central Massachusetts, disclosed a total of $1.69 million in debt in filings with U.S. Bankruptcy Court for the District of Massachusetts, but creditors have claimed he has nearly $70 million in debt as the result of personal guarantees related to real estate financing, where his personal assets were offered as collateral. 

Norton, his Wellesley-based firm Franklin Realty Advisors, and other associated entities are facing five lawsuits filed across three states since the beginning of May, all involving unpaid debt relating to Central Massachusetts real estate projects and associated entities. Norton has apparently stepped away from FRA since his financial dealings imploded this spring.

Filings related to the lawsuits and bankruptcy show Norton has made a number of personal guaranties involving business loans for commercial real estate projects.

These properties include Mercantile Center, the mixed-use site featuring two office towers in Downtown Worcester, the Worcester Business Center at 67 Millbrook St., the Wellsworth Hotel and conference center in Southbridge, and the Southbridge Innovation Center.

Norton did not respond to requests for comment via voicemail and emails to himself and his legal counsel. FRA did not respond to emails or a voicemail left with the firm’s office line.

Tenants at FRA-owned properties include some of the most important entities in the Central Massachusetts economy, including UMass Memorial Medical Group, law firm Mirick, the Worcester Telegram & Gazette newspaper, media organization MassLive, real estate brokerage Kelleher & Sadowsky Associates, the Worcester District Registry of Deeds, law firm Fletcher Tilton, Bank of America, Blue Cross Blue Shield of Massachusetts, and Reliant Medical Group, according to CoStar and Google Maps listings. 

Other tenants include federal agencies like the Internal Revenue Service and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Norton’s financial troubles come despite high levels of occupancy in Mercantile Center’s offices.

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Photo I WBJ File

Mercantile Center was taken over by Franklin Realty Advisors in 2015.

Combined with all tenants, the office towers at 100 and 120 Front St. host more than 1,500 employees, according to the website for Mercantile Center. Managing directors and senior management of FRA and its affiliates have developed, acquired, or managed more than $1.25 billion of real estate projects, according to FRA’s website.

A member of the WBJ Hall of Fame’s Class of 2021 and a frequent member of WBJ’s Power 50 and Power 100 lists, Norton has been widely seen as one of driving forces of the local real estate scene. 

Recognized for his charitable giving, he provided complimentary space at Mercantile Center for UMass Memorial Health Care to establish the first free COVID-19 testing site in Central Massachusetts and made space available for front-line healthcare workers at his Southbridge hotel site. 

Now, he finds himself in debt to a number of local power players and institutions. 

Norton’s Chapter 7 Bankruptcy filing lists more than 150 people and entities as his creditors, including FRA and other entities he is a part of: real estate firm CBRE, Cornerstone Bank, Country Bank, Middlesex Savings Bank, Rockland Trust, Savers Bank, Webster Five bank, Downtown Worcester Business Improvement District, and state agency MassDevelopment. 

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Photo | Courtesy of Franklin Realty Advisors

The Worcester Business Center, a former manufacturing mill, is home to about 20 tenants.

Paperwork included in the filing did not include the amount owed to many of these entities, but did note Norton owes $511,000 to the IRS and $233,000 to the Massachusetts Department of Revenue. 

Adding to the $744,000 owed in taxes, Norton listed a total of $947,615 in non-priority debts, leading to a total of $1.69 million. 

However, Norton’s use of personal guaranties for business dealings relating to debt associated with his commercial real estate holdings blurs the line between his personal and business finances, potentially throwing the future of key Downtown Worcester properties into question. 

Intertwined finances

While the filing is for personal bankruptcy and not that of FRA or other Norton-backed entities, both the Chapter 7 filing and lawsuits filed against Norton and his business interests show he has taken personal guaranties for financing used to improve his Central Massachusetts real estate portfolio. 

With bankruptcy proceedings still underway, two creditors have filed proofs of claim, which are formal statements filed by a creditor in a bankruptcy case documenting the amount of money the debtor owes.

Ware-based Country Bank submitted a claim to the court for $67 million in money loaned for obligations relating to FRA’s Front Street properties, while Worcester-based Cornerstone Bank filed a claim of $1.67 million relating to money loaned to FRA. Both business-related financing agreements involved personal guaranties.

Cornerstone Bank filed a lawsuit against Norton in Worcester County Superior Court on May 9 relating to its financial agreements with Norton.

Cornerstone’s lawsuit alleges Norton failed to make interest payments on a revolving line of credit totaling $1.6 million and involving a personal guaranty. The guaranty agreement attached to the lawsuit filing specifically noted Cornerstone was unwilling to make the loan without Norton agreeing to the guaranty.

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Photo | Edd Cote

Chip Norton, the owner of Franklin Realty Advisors.

The lawsuit accuses Norton of offloading two personal residential properties in Dover and Falmouth for well under their market value in an alleged attempt to avoid them from being taken by the bank. 

Cornerstone declined to comment on Norton’s bankruptcy filing and lawsuit. Country Bank did not respond to a request for comment on its proof-of-claim filing. 

The lawsuit claims Norton breached the guaranty and fraudulently transferred the properties, requesting the court declare the transfers null. 

Included in the lawsuit is a notice of default sent to FRA on April 29. In addition to the failure to make the March interest payment, the letter lists three additional reasons the loan is considered to be in default, claiming Norton became a debtor to an entity other than Cornerstone, that he guaranteed liabilities of another entity in a transaction, and he entered into one or more material transactions.

The lawsuit stated Cornerstone had become aware of merchant cash advance loans Norton had applied for.

Cash advances

Merchant cash advances are a type of high-interest funding where a borrower agrees to hand over a certain percentage of future daily revenues in exchange for a lump sum, making payments until that lump sum and the advancer’s additional cut are paid off. 

These agreements are not subject to regulations governing loans. MCAs come with high costs and are generally only pursued when conventional lines of credit are unavailable, according to Bloomberg, generally providing a lifeline for small retail businesses who face an unexpected expense but have consistent cash flow. 

Lawsuits from merchant cash advance providers show Norton has agreed to at least two of these agreements since March to fund business-related costs, allegedly violating both agreements soon thereafter. 

Comprehensive Merchant Capital, a merchant cash advance provider based in Indiana, filed a lawsuit in New York naming Norton and over 20 entities related to his business dealings. The lawsuit alleges Norton agreed to a MCA where he received $130,000 in exchange for later revenues equaling $200,070. 

CMC alleges Norton has a remaining balance owed of $48,117. Combining that with banking fees, default, and attorneys’ fees, the firm alleges it is owed upward of $68,177. CMC did not respond to a request for comment.

Connecticut-based Purple Tree Funding claims Norton agreed to an MCA but then failed to meet the terms of the agreement. 

Purple Tree alleges Norton agreed to $100,000 in financing for future revenues worth $149,000 in April, but then defaulted on the agreement that same month when he placed a stop payment on the bank account he was required to deposit the funds into. Purple Tree did not respond to a request for comment.

Norton’s listed creditors include another MCA-focused firm called Honest Funding, a firm based in New York. 

More lawsuits

Most of the court proceedings relating to the lawsuits targeting Norton and his businesses are on pause as the bankruptcy proceedings play out.

In addition to the lawsuits from Cornerstone and the MCA providers, Norton has faced lawsuits from Worcester-based Lauring Construction and associated entity Lauring Enterprises, firms which have been closely involved in his Central Massachusetts projects from the get-go. 

Lauring Construction has been involved in more than 40 projects totaling $30 million for FRA, according to Lauring’s website. But the longstanding relationship between the two firms faced difficulty last year, after FRA only paid $73,078 of the $400,477 Lauring Construction was owed for a renovation of leased space utilized by the Bureau of Alcohol, Tobacco, Firearms, and Explosives in Mercantile Center.

The company received no explanation for the lack of payment, according to Lauring Construction's filing in Worcester County Superior Court in May.

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Photo | Franklin Realty Advisors

An aerial view of the Southbridge Hotel and Conference Center.

Lawsuit documents state Norton called Lauring Construction President John Lauring around May 9 to apologize for his abuse of his trust in regards to the ATF project, but declined to commit to paying the debt. It states Lauring is under the belief FRA cross-collateralized its financing in violation of the debt covenant.

After Norton did not appear for a June 5 hearing, the judge awarded Lauring $327,399 in a default judgement, according to court records. 

Another lawsuit, this one filed by Lauring Enterprises and DMC Lauring in June, says the two entities each entered an agreement with Southbridge Conference Investors LLC and Norton. 

The deal saw both entities provide $250,000 for an 18.5% stake in an investment vehicle related to development of the Wellsworth Hotel, formerly known as the Southbridge Hotel and Conference Center. A $150-million project, the 203-room hotel and conference center sits in the larger Southbridge Innovation Center owned by FRA. 

In a familiar story, the June lawsuit states Norton provided a personal guaranty for the repayment of the investments, but then failed to make required disbursements, including payments owed as of March 2025. 

The June lawsuit says the plaintiffs have received information raising serious doubts about Southbridge Conference Investors’ financial stability and did not receive satisfactory assurances the firm would meet its obligations.

The May lawsuit from Lauring Construction states the company’s understanding is Norton has stepped away from his duties at FRA.

John Lauring declined to comment on the lawsuits.

Norton’s bankruptcy filing seems to confirm he has stepped away from management of FRA. He lists his current occupation as a driver for various unnamed employers, with an estimated monthly income from this employment of $1,000. 

Eric Casey is the managing editor at Worcester Business Journal, who primarily covers the manufacturing and real estate industries.