Demolitions should have already begun on Fourth Quarter Properties' downtown redevelopment project, but legal roadblocks have put the project on hold and jeopardized almost two years of planning.

Project manager Jane Vaughan of Menlo Equities said the prolonged bankruptcy court battle fought by Fourth Quarter—the company created by the Forum Development Group to complete the project—has not ended.

The property has been bankrupt since the failure of the Town Center Mall, which was owned by American Mall Properties. By taking over the property, Fourth Quarter's partners also took on that bankruptcy.

Because of the immensity of the project and rising construction and material costs, Fourth Quarter is having a harder time gathering financial backers and investors

than it previously thought it would.

"There is a perception of it being a very large, very risky project, and it could be tight," Vaughan said.

Part of the risk comes from the complexity of Fourth Quarter's plan itself. The existing Town Center Mall—empty and dark today—and the surrounding parking lots and space would become 275,000 square feet of office space for small and medium sized companies, 292 housing units and a million square feet of retail space, including a movie theater.

Investors are crucial to the project because if Fourth Quarter is going to move forward with its plans—that were approved by the Sunnyvale City Council on Aug. 17—a bankruptcy judge must declare the project financially viable.

Since the approval, Fourth Quarter has maintained that it intended to have the bankruptcy court case cleared and all the pieces in place to start demolition at the beginning of the year—after the holiday rush, which it did not want to interrupt.

"I never thought it was an easy thing to do, but I had hoped it would have been ready by year's end," Vaughan said.

The next bankruptcy court date for the project is Feb. 28, and in the wait for that meeting, some of the current stakeholders have gotten restless. According to Vaughan, Lehman Brothers—who own much of what used to be the Town Center Mall—have begun looking for other developers to present plans for alternate projects.

And all that work is what Vaughan thinks will ultimately keep the Fourth Quarter plan going and keep the project on track, if slightly delayed.

"I'm still confident it will go through, it will just take a little more time," Vaughan said.