Aurora Christian School is making plans this fall about where to conduct classes next year, should it be unable to lease its present facility.
The school is leasing its site at 2255 Sullivan Road in Aurora from Fifth Third Bank.
The school's superintendent said in a July note on the school's website, aurorachristian.org, that Fifth Third had agreed to accept a deed in lieu of foreclosure on the property. And "the lawsuit based on the operating line of credit has been dropped, and the bank will not pursue any further legal action during our lease term," Superintendent Colleen House wrote.
However, according to Kane County circuit court clerk records, the suit has not been dismissed yet, and the school and the bank are due to appear before a judge Thursday to review its status.
There is no indication on the Kane County Recorder of Deeds website that the deed in lieu of foreclosure transaction has been recorded.
Multiple messages left for House and attorneys for the school and Fifth Third Bank have not returned.
Fifth Third sued Aurora Christian in April over an unpaid loan. The bank said the school had failed to repay $240,873 of a $500,000 revolving loan. The two-year loan was to have been repaid by March 1. The school used it primarily to pay bills during summer months, when cash inflow was limited.
The bank is seeking repayment of the remaining balance, including taking the collateral put up for the loan -- furniture, computer systems, fixtures, personal property, inventory, miscellaneous equipment, investment property, letters of credit, cash and securities held by the school.
The bank and school are also trying to restructure the school's long-term debt, according to House.
Fifth Third supplied letters of credit guaranteeing repayment of more than $18 million the school borrowed in the mid-2000s to buy, remodel and outfit the Sullivan Road campus.
The school is obligated to start paying principal in 2012. It intended to sell unused land on Deerpath Road to cover the interest payments in the meantime. It has had a hard time selling that land since the real estate crash started in 2007.
Fifth Third planned in 2009 to pull its letters of credit unless the school started making those interest payments out of operating revenues, not asset sales. The school's 2008 federal tax return, filed Nov. 13, 2009, showed that in the fiscal year ending June 30, 2009, the school took in $6.79 million but spent $7.98 million. That's the most recent return publicly available.
The nondenominational school opened in 1975 with 82 students in kindergarten through ninth grade in space borrowed in a church. It bought a former factory on Illinois Avenue in 1976, enlarged it in 1986, and purchased the former Benjamin Franklin Junior High School on Blackhawk Street in 1978.
In the 1990s, it made plans to build a new high school west of town, on Deerpath Road near Orchard Road. But another idea surfaced -- more space for less money, in a former Chicago Sun-Times distribution warehouse.
It remodeled and expanded the building and in 2004, it moved the middle school and high school to the 26-acre campus on Sullivan. Early this year it moved all grades to the campus, in part to save money. Last year, the school had 740 students in prekindergarten through 12th grade. In 2009, it had 900.
According to the superintendent's note, a decision about next year will be reached before the start of the second semester.