NEW YORK — The Supreme Court of the State of New York, Kings County, has issued its ruling in the long-running loan dispute between Brooklyn Amity School and Bank Asya, the Turkish bank whose operations were terminated and placed into liquidation. The court held that the school’s outstanding obligations under the loan agreements amount to approximately $12.4 million, including accrued interest.
At first glance, the ruling may appear to be a significant legal victory for the plaintiffs. However, a closer examination of the case reveals several noteworthy outcomes for Brooklyn Amity School as well. The court did not simply adopt the plaintiffs’ claims in full. In particular, it took into account approximately $12.5 million in collateral that had been pledged against the loans and credited that amount toward the debt.
More importantly, the ruling contains no order requiring the closure of the school, the suspension of educational activities, the transfer of school property, or any action directly affecting students’ education. The decision is fundamentally a financial determination concerning a debt obligation.
The Case Stems from Loans Obtained in 2011
The origins of the dispute date back to 2011, when Brooklyn Amity School obtained approximately $12 million in financing from Bank Asya to purchase its current school building. To provide additional security for the loan, businessman Ali Akbulut pledged approximately $13 million held in a Bank Asya account as collateral.
Later that year, the school obtained an additional loan of approximately $3.5 million for renovations and improvements to the property. This second loan was secured by a mortgage on the school building.
In subsequent years, during periods when the school experienced cash-flow difficulties, certain loan payments were made from Ali Akbulut’s collateral account. Throughout the litigation, this practice became one of the school’s principal defenses.
School officials argued that Bank Asya’s previous use of the collateral account to satisfy loan obligations established a practical course of dealing between the parties. According to this argument, the bank had historically relied on the collateral account to cover loan payments before seeking repayment directly from the school.
The Seizure of Bank Asya Changed the Dynamics
The development that fundamentally altered the trajectory of the dispute was the Turkish government’s takeover of Bank Asya and its subsequent placement into liquidation.
The closure of Bank Asya affected not only Turkey’s banking sector but also a number of international lending relationships. The Brooklyn Amity School case became one of the most prominent examples of these consequences in the United States.
According to the school, the post–July 15 environment significantly reduced the flow of students from Turkey to the United States. Some families withdrew their children due to pressure and uncertainty, charitable donations declined, and the broader political climate surrounding Turkey exerted indirect pressure on educational institutions associated with the Turkish-American community.
For these reasons, the school argued that it should not be viewed merely as an ordinary commercial borrower. It maintained that the circumstances affecting the loan relationship were far from normal market conditions.
The court, however, concluded that these arguments were insufficient to eliminate the school’s contractual debt obligations.
The Court Relied on the Loan Agreements
In his ruling, Justice Reginald A. Boddie relied primarily on the explicit terms of the loan agreements.
According to the court, Brooklyn Amity School was directly responsible for repayment under the contracts. The existence of collateral did not mean that the bank—or later, the liquidators—was legally required to exhaust the collateral before pursuing the borrower.
The court noted that the loan documents contained no provision requiring the plaintiffs to proceed against the collateral first. Consequently, the school’s argument that the collateral should have been utilized before any claim against the school was rejected.
This reasoning formed the legal foundation of the decision. The court emphasized that where parties have entered into clear written agreements, a court cannot rewrite those agreements by inserting terms that were never included by the parties themselves.
Nevertheless, the Collateral Played a Critical Role
Although the court concluded that the plaintiffs were not required to pursue the collateral first, it did not disregard the collateral in calculating the final judgment.
On the contrary, one of the most significant aspects of the ruling was the court’s recognition that approximately $12.5 million in collateral held in Ali Akbulut’s account had to be credited against the debt.
Several factors contributed to this favorable outcome for Brooklyn Amity School. The school’s attorneys and advisors successfully introduced relevant rulings from Turkish courts that undermined key aspects of the plaintiffs’ claims. They also presented evidence developed through extensive analysis of documents obtained from the bank. In addition, Ali Akbulut’s testimony before the court proved influential.
The school board’s decision to retain the highly regarded law firm Steptoe LLP, along with experts in Turkish law and banking regulations, played an important role in preventing potentially more severe consequences.
The court also considered a settlement agreement reached by the parties in March 2021. Under that agreement, approximately $12.56 million in collateral was credited toward the debt, leaving an outstanding principal balance of approximately $7.69 million.
Applying the contractual interest rate to that remaining balance, the court calculated the total amount owed at $12,461,647.41.
In this respect, the decision cannot be characterized as a complete victory for the plaintiffs. By crediting the collateral against the debt, the court substantially reduced the final amount awarded.
The Plaintiffs Sought Much More
One of the most striking features of the case was the large gap between the amount ultimately awarded and the amounts sought during the litigation.
The plaintiffs pursued substantially higher sums, including accrued interest and other claims. At various stages of the proceedings, the total amount sought reportedly reached $34 million.
The primary reason for that figure was the plaintiffs’ position that the Akbulut collateral should not be credited against the debt. The school, by contrast, argued that the collateral should have been applied as of the date the debt became uncollectible.
In its final ruling, relying on a March 2021 interim decision, the court credited the collateral as of March 2021 and applied interest only to the remaining balance thereafter.
As a result, the judgment remained at approximately $12.4 million rather than reaching the significantly higher figures advocated by the plaintiffs.
For Brooklyn Amity School, this distinction allows the outcome to be viewed not simply as a loss, but also as a case in which potential damages were substantially limited.
The School’s Political-Pressure Defense Was Rejected
Brooklyn Amity School argued that political developments in Turkey had severely disrupted its financial position and impaired its ability to repay the loans.
Indeed, a May 13, 2026 analysis published in The New York Sun suggested that Turkey was utilizing the American legal system for political purposes and targeting Amity School.
According to the school, the political environment in Turkey directly affected student enrollment and charitable contributions, resulting in a substantial decline in revenue.
The court, however, concluded that these circumstances did not excuse the school’s contractual repayment obligations. The ruling found insufficient evidence that the plaintiffs or the Bank Asya liquidators had directly prevented the school from making payments.
This aspect of the decision demonstrates that the court approached the dispute primarily through the lens of contract law rather than broader political considerations.
The Liquidators’ Standing Was Upheld
The school also challenged the authority of the Bank Asya liquidators to pursue claims in U.S. courts.
The court rejected that argument as well.
As it had in earlier rulings, the court concluded that documentation showing the liquidators had been appointed by Turkish courts was sufficient to establish their authority. The court found that no new evidence had been presented that would justify a different conclusion.
The Decision Does Not Shut Down the School
For the public, perhaps the most important question is whether the ruling affects the school’s continued operation.
The court’s decision contains no provision requiring the closure of Brooklyn Amity School, restricting its educational activities, disrupting students’ education, or transferring ownership of the school building.
The judgment concerns a monetary debt and, in its current form, does not automatically interfere with the school’s day-to-day educational operations.
Brooklyn Amity School remains open and continues to provide educational services. School administrators and legal counsel are reportedly evaluating the financial and legal implications of the decision and reviewing all available options, including a possible appeal.
Despite the broader political and institutional backdrop surrounding the dispute, the New York court evaluated the case primarily on the basis of the contractual agreements between the parties. The court’s approach reflected a straightforward principle: political developments do not eliminate clear contractual obligations.
At the same time, the court’s decision to credit the collateral against the debt prevented the plaintiffs from obtaining the much larger sums they had sought.
As a result, while a substantial financial judgment was entered against Brooklyn Amity School, the court did not order any measures that would halt the school’s operations, and it significantly limited the plaintiffs’ recovery compared to the amounts originally requested.
