Old National Bank has sued local developer Paul Kite, alleging he and his company, PK IND Partners LLC, owe millions of dollars for a loan tied to the 2008 redevelopment of property at Indianapolis International Airport.
The suit, filed Tuesday in Marion Superior Court by the Evansville-based bank, claims Kite and his firm owe $15.8 million. Kite did not return a call from IBJ seeking comment.
The developer in April 2008 reached an agreement with the Indianapolis Airport Authority to lease the former ATA Airlines hangars and operations center at the southeast corner of South Hoffman and North Perimeter roads. That same month, it received a $27.9 million construction loan to renovate and reoccupy the property, which included more than 123,000 square feet of office and warehouse buildings on 16.5 acres.
The loan came from Columbus-based Indiana Bank & Trust Co., which Old National acquired in 2012.
ATA Airlines filed for bankruptcy and dissolved in early 2008, after last-ditch efforts to line up a buyer failed to materialize.
The developer initially had eyed the Indianapolis-based airline’s former headquarters, at West Washington Street and Girls School Road, for a new research laboratory, but Kite decided against the project due to lack of interest from prospective tenants.
The developer eventually landed big-name tenants for portions of the property, including FedEx, Rolls-Royce and Aero Engine Controls (now part of Rolls-Royce).
Current tenants include Kite’s companies, Strongbox Commercial and Kite Harris Property Group, as well as BDP International and multiple Rolls-Royce operations.
According to the lawsuit, the loan, doled out in two segments, was required to be paid off by Aug. 31, 2019, after Kite missed earlier repayment deadlines in 2017 and 2018.
According to the suit, PK acknowledged it was in default in September 2019 and said it would pay the balance owed to the bank by the end of November. But that didn’t happen.
In its lawsuit, Old National asked the court to require Kite to pay the balance of the loan, plus interest (roughly $251,148 at the time of the filing), as well as the bank’s attorney fees and legal expenses.
Old National also asked the court to foreclose on the mortgage and to have all rents paid on the property go to the bank instead of Kite.
A hearing is set for Feb. 21, at which time the court will determine whether to grant the bank’s request for a receiver, which would oversee the property.
Old National Bank and Indianapolis Airport Authority did not return calls requesting comment.