The Palmetto Bank initiated on Wednesday in the Cherokee County Court of Common Pleas foreclosure proceedings against Sanders Bros. and its loan guarantors, according to court documents.

The bank claims in its lawsuit that Sanders Bros. owes it about $10 million in unpaid mortgage and loan payments.

Sources close to the company said Sanders Bros. has laid off most of its administrative staff, ceased its operations and has sold off its maintenance contracts to a third party.

According to an accompanying affidavit, Palmetto Bank has been “advised by representatives of the defendants that they are unable to make payments to the bank and will need to terminate employees, insurance and wind down, if not close the business activities.”

Sanders Bros. once had annual revenues of $20 to $50 million and employed as many as 500 people, a company profile on a Web site said.

Cherokee County Development Board Executive Director Jim Cook said the ongoing economic woes makes it difficult on building contractors.

“The majority of prospects are looking for existing buildings,” Cook said. “I hate to see them shut down. But, now it’s a tough business.”

Telephone calls to Sanders Bros. weren’t returned Thursday.

The plaintiff claims Sanders Bros. entered into a $2.4 million mortgage, referred to as Note A in the lawsuit, with the bank on Dec. 28, 2007. The lawsuit claims that Sanders Bros. defaulted on the mortgage and, as of June 14, owes $2,273,627.43 in principal, another $79,374,76 in interest and $5,000 in late charges.

The parties also entered into an agreement for a $7 million business loan (Note B) executed on Sept. 18, 2007, the lawsuit said. Sanders Bros. backed the loan with collateral of the company’s inventory, deposit accounts and investment property as well as other company assets.

The lawsuit claims the defendants defaulted on the loan and subsequent forbearance and security agreements and owes the bank $5,285,423.48 plus interest in the amount of $332,124.26.

The bank issued the company another loan. This time for $3 million to Sanders Bros. Holdings on Sept. 29, 2006. The lawsuit claims the company defaulted on the loan, or Note C, and owes $2,028,607 in principal and $112,796.74 in interest.

The lawsuit also asks the court to appoint a receiver to manage the property.

Calls to Palmetto Bank officials and lawyers handling the case weren’t immediately returned Thursday.