A lawsuit against Fulton Science Academy is a step in the foreclosure process on school property that will allow Wells Fargo to recover the investment of bondholders, according to bank officials and the school's attorney.
"Wells Fargo acts as a trustee for publicly held bonds and has a responsibility to recover the investment of the bondholders. Wells Fargo is following the appropriate legal procedures to foreclose on this property," said Jamie Dexter in a statement issued by Wells Fargo.
The property is on Fanfare Way in Alpharetta, which is next to the west side of GA 400.
Only the middle school organization was the target of the lawsuit, Dexter said. Fulton Sunshine Academy and Fulton Science Academy High School were named in the suit because they are listed as guarantors of the debt.
The lawsuit was not a surprise to the school
"We continue to communicate directly with the board of directors of the middle school to ensure that they understand the process and why we are taking this action," Dexter said.
Mitchell T. Bagwell of Foltz Martin Hudson & Knapp, is the attorney for Fulton Science Academy. He said this step was expected.
"This was an anticipated step in the settlement agreement process which all parties, including Wells Fargo and the Schools, have agreed to resolve the bond matter. A consent judgment ending the lawsuit, signed by Wells Fargo and the Schools, will be filed within the week, again as anticipated in the Settlement Agreement," he said.
The school never drew down the full $18.9 million bond. Dexter said the school owes $9.9 million plus interest. She said after one monthly payment was made the school started having issues with its charter, which led it to default.
"The default is a direct result of the Fulton County School Board's decision to terminate the middle school charter. The bond documents stipulate that if a school lost its charter, that would result in automatic default," Bagley said. "Therefore, the school was not defaulted due to missed payments. The settlement process began shortly after the middle school charter termination and will resolve the debt issue."
Bagley said sale of the land would be the last step in the settlement process, which he expects to be completed by early spring. He said the settlement process is complicated and hard to explain without getting into too much detail.
"However, the Schools are pleased that a settlement has been reached with respect to the bonds," he said.