Shuttered SC university sued over allegedly owing bank nearly $3.5 million

Limestone University, which closed last year, was sued in federal court recently for owing millions of dollars on an unpaid loan, a lawsuit filed by First National Bank of Pennsylvania alleges.

The shuttered Gaffney university took out a $3.5 million promissory note from the bank in 2021, the lawsuit says. Now, Limestone University owes First National Bank more than $3.4 million for the unpaid loan, late fees and interest, according to court filings.

The lawsuit and court proceedings will set the process allowing Limestone University to sell its property, said attorney Rick Mendoza. Mendoza said he will represent the university and approved asset receiver, which is expected to be Aurora Management Partners, the Maynard Nexson attorney said.

“This is a positive thing,” Mendoza said Monday afternoon.

The lawsuit was filed in federal court in Spartanburg on March 24. The complaint also names the U.S. Department of Agriculture as a defendant. The First National Bank of Pennyslvania is being represented by attorneys at Parker Poe Adams & Bernstein.

Limestone University voted to close its doors in April 2025. The school notified its primary lenders, the First National Bank of Pennsylvania and the USDA, that it could not meet its financial obligations anymore, according to court documents.

The bank is worried about its collateral, including “the maintenance and security of the now-abandoned facilities of the university, the preservation of cash collateral, and the oversight of earnest money and deposits of potential buyers of defendant Limestone’s facilities and/or online programming.”

The private Cherokee County school first opened in 1845 and graduated its final class in May 2025.

A phone call to Parker Poe Adams & Bernstein’s office with questions about the lawsuit was not returned Friday.