Bank Sues Doctor Over $7.86M Loan Default
First Western Bank & Trust seeks summary judgment against Dr. Khaled Rabadi over guaranties on three defaulted commercial loans.
Updated on Nov. 3, 2026 in Debt Relief
Live Poll
Should personal guarantors be fully liable when business loans default?
First Western Bank & Trust has sued Dr. Khaled Rabadi in Grand Forks County District Court over commercial loan guaranties he signed for three companies. Rabadi has moved the case to U.S. Bankruptcy Court and denies liability.
Why it matters
The lawsuit follows missed payments that began in July 2025 and a final payment that was not made on December 25, 2025. It comes as seven affiliated entities filed Chapter 11 bankruptcy petitions on October 16, 2026, which could affect how the debts are resolved.
The bank asks the court to enter summary judgment against Rabadi for the full amount owed plus interest, attorneys' fees, and costs. Rabadi has until November 30 to respond, and he has listed defenses including estoppel or waiver, unclean hands, and accord and satisfaction.
The players
First Western Bank & Trust
A bank that filed the lawsuit seeking to collect on defaulted commercial loans and guaranties.
Dr. Khaled Rabadi
A Grand Forks physician who signed the loan guaranties and is contesting liability in the lawsuit.
The details
Rabadi signed commercial guaranties for loans made to Kidney and Hypertension Center, PLC; KDJ Investment Group, LLC; and KDJ Properties, LLC. The companies missed payments starting July 2025, did not make a final payment due December 25, 2025, and did not pay property taxes when due.
Timeline
July 2025: The companies began missing loan payments.
December 25, 2025: A final loan payment was not made.
January 19, 2026: First Western filed a separate foreclosure case.
May 15, 2026: Rabadi filed an answer denying liability.
November 30: Deadline for Rabadi's response to the summary judgment motion.
Legal Context
Personal guaranties tied to business loans often become central when affiliated companies enter Chapter 11, as the lender may pursue the guarantor directly under federal bankruptcy rules. This case shows how a guarantor's liability can be litigated alongside, and moved into, a borrower's bankruptcy proceedings.
Individuals who personally guarantee business loans can be held responsible for the full balance if the borrowing company defaults. Anyone signing a personal guaranty should understand that the lender may pursue them directly, even when the business enters bankruptcy.
The takeaway
A personal guaranty can make an individual liable for business debt even after the company files for bankruptcy. Before signing one, review the exact amount and terms you could be responsible for.
What happens next
Rabadi's response to the bank's motion for summary judgment is due November 30.
Further reading
For related coverage of loan defaults and creditor claims, see Debt Relief in Grand Forks.
Source note: This article includes information reported by Valleynewslive.
Live Poll
Should personal guarantors be fully liable when business loans default?
