The bankrupt Great Plains Airlines flies back into the news. The airline went bust in 2004.
It got its start-up loan from the Bank of Oklahoma. With the Airport’s blessing, Air Force Plant Number three, now the home of Spirit Aerosystems and Navistar, was used as collateral. The City and the Airport paid $7.1 million to settle the debt in 2008. But that agreement was overturned by the state supreme court when challenged by a group of tax payers.
Now the bank has refilled its lawsuit, seeking $15.6-million. That is the original amount, plus interest.
The original deal was struck during the Susan Savage administration, and the settlement was worked out during Kathy Taylor’s term in office as Mayor.
Below is BOK's news release/media summary on the case:
Bank of Oklahoma, today, filed a lawsuit against the Tulsa Airports Improvements Trust (TAIT), an affiliate of the City of Tulsa, which owns and operates the Tulsa International Airport. The lawsuit seeks $15.6 million for repayment of a loan made by the Bank of Oklahoma in 2000 to Great Plains Airlines.
Background information and timeline:
- At the time, the City of Tulsa had promoted the start-up airline as way to procure direct flights to the East and West Coasts.
- The loan was secured by a mortgage on the facility housing Spirit AeroSystems and the Navistar bus plant. In the event that Great Plains could not repay the loan, TAIT was to purchase the mortgaged facility for the amount of the loan, which would affect repayment to the Bank.
- Great Plains defaulted on the loan in 2004 when $7.1 million was owed and TAIT failed to live up to its agreement.
- By 2008, the loan balance had grown to $11.8 million with additional interest and legal fees.
- After the Tulsa District Court made a number of rulings in favor of the bank, the City and TAIT settled the litigation as the City paid the Bank $7.1 million.
- In 2011, a taxpayer-led lawsuit attacked the settlement and the Oklahoma Supreme Court ruled the City was not responsible for the loan. The Bank returned the $7.1 million to the City.
Current status:
- After the settlement funds were repaid to the City, in the summer of 2012, TAIT re-initiated settlement discussions with the Bank with a goal to avoid another lawsuit by acknowledging responsibility and by making partial restitution to the bank.
- During the last eight months, senior representatives of TAIT and the Bank have met regularly in an attempt to forge a common ground in the spirit of protecting the airport, a major economic force in our community.
- According to executives at the Bank of Oklahoma, the Airport Trust recently advised it would not pay anything to satisfy the obligation and terminated all attempts at amicable resolution, leaving the Bank no other alternative but to file the lawsuit.
- The loan now has a balance of $15.6 million because almost a decade has passed since the loan went into default.