Banco Popular sues defunct American University for $18.6M
Banco Popular de Puerto Rico has filed a foreclosure lawsuit against American University, which closed in December, for several loans the defunct college has since defaulted on.
In the suit filed at Bayamón Superior Court, the bank outlines that American University – along with co-guarantors Global Institutional Properties and individuals Juan Carlos Nazario-Torres, Cristina Costa and Francisca Torres-Marrero – took out loans and credit lines, with collateral including the school’s properties in Bayamón and Manatí, as well as machinery, equipment and other assets.
The bank seeks approximately $3 million from American University and $11.7 million from Global and the co-guarantors, plus $3.9 million for expenses and legal fees.
Banco Popular provided financing to American University beginning December 2016, followed by multiple extensions through 2022. According to the lawsuit, all the loans and credit lines are now in default.
The financial institution is requesting that the court order a public auction of the properties that were used as collateral for it to be repaid.
Although the university has been operating since its founding in 1963, it has cited difficulties due to Puerto Rico’s population decline and migration as factors leading to its closure.
“Between 2010 and 2020, Puerto Rico lost 11.8% of its population. In August 2000, the Puerto Rico Department of Education educated 611,586 students; in 2017 it educated 343,610; and in August 2022 it educated only 259,535 students. The private pre-K-12 sector has suffered the same fate, which went from 210,844 students in 2001-02 to 144,034 in 2014-15 and 108,178 students in 2020-21,” the university states on its website.
“This reality implied that the recruitment of new students would be increasingly reduced and costly and would not yield the results that the University requires to operate with integrity and comply with its values, mission, goals and objectives academically and in service to our students,” the school continued.
“All this led to the sad, complex and difficult decision to end the operation of the University on Dec. 31, 2023,” it added.
