Moody’s Investors Service said it is taking no immediate rating action after the Oklahoma Supreme Court reversed a $7.1 million settlement between Tulsa and the Bank of Oklahoma on a loan default.
The court’s ruling came in response to a claim from 10 Tulsa taxpayers that the city’s payment of $7.1 million to BOK from a sinking fund constituted unlawful use of city funds. On Oct. 11, the Supreme Court ruled that the bank’s claim against the city was not viable and ordered the funds returned.
The case stems from a 2000 loan to Great Plains Airlines from the Tulsa Industrial Authority and BOK. When Great Plains defaulted in March 2004, the Tulsa Airport Improvement Trust was required to purchase the mortgaged property to cover the outstanding loan balance of about $11.6 million. BOK sued the trust and the city in 2008. The suit was settled when the city agreed to pay $7.1 million out of its sinking fund.
The money will be re-deposited into the fund and be used to offset general obligation bond principal and interest, officials said.
“It is unclear at this time when the proceeds will be rewired back to the city, as the Oklahoma Supreme Court remanded the case to the district court to direct the repayment,” Moody’s noted.
The Supreme Court reversal reopens the possibility that BOK could revisit its original $12.5 million claim against the trust, which owns and operates Tulsa International Airport, analysts said.