Medical Office Developer Files for Bankruptcy

INDIANAPOLIS — The developer of an unfinished medical office complex filed for Chapter 11 Bankruptcy protection, four years after its main lender also filed for bankruptcy.
Binford Medical Developers, based in Indianapolis, filed Chapter 11 reorganization earlier this month on an $8.5 million, 47,000-square-foot unfinished project in the city. The decision to file for bankruptcy protection was done in hopes of preventing a forced sale to collect unpaid taxes and to resume construction on the 17-acre property, according to the company. USA Capital Corp., financier of the project, filed for similar protection in 2006. 
Ken Schmidt, a Binford principal, says in reports that the filing buys time for the developer to close on a settlement with its original construction lender and a new loan to complete the initial building in the Binford Medical Complex. Schmidt, who hasn’t paid interest on the $32 million loan for the almost completed five-building complex building since 2006, is waiting out the settlement.
USA Capital, which provided $7.4 million of the $8.5 million loan promised to the developer, was funded by thousands of small investors, 92 of which are listed on the title for the medical property.
Binford is said to have procured a new loan that will set aside $1 million to complete the first building, along with funds to settle with the 92 investors from the first loan. Schmidt says in reports that the original investors have agreed to take less than they are owed but did not elaborate further than that. 
Presently, the building is 15 percent occupied by two tenants. Tenants include a 4,300-square-foot urgent care facility, which continues to maintain rent payments while not open for business, and Seward sales Corp., which occupies a 2,200-square-foot area.
Schmidt, who has developed 22 smaller-scale offices and building projects in the area, claims to have a number of leases lined up for the complex once it is completed.