SOUTH BEND, Ind. (AP) _ The assets of Avanti Motor Corp., the nation's smallest production line car maker, have been seized after a South Bend bank foreclosed on nearly $3 million in unpaid loans, authorities said Friday.

The 1st Source Bank obtained an order from St. Joseph Circuit Court late Thursday to seize the automaker's property.

Sheriff's deputies began removing Avantis from the production line Thursday evening, taking nine of the $40,000 hand-built cars to the lot of a nearby auto dealer. The seizure was suspended when officials from Avanti and 1st Source agreed to resume negotiations on the unpaid loans, police said.

Avanti offices were open this morning, but owner and president Stephen Blake out of his office and not available for comment.

In 1982, the carmaker pledged its assets for 1st Source loans of $2.5 million and $1 million. In court documents filed Thursday, the bank claimed the unpaid balances on both loans totaled $2.94 million.

Court documents placed the value of Avanti property at $3 million - $700,000 in completed cars and $2.3 million in other property.

Avanti can challenge the seizure order at a hearing scheduled for next Friday.

Studebaker Corp. first produced the Avanti in 1962. When Studebaker went out of business the following year, Avanti Motor Corp. was formed to continue production. Annual production had risen to about 400 cars.

Blake, a Washington D.C. real estate developer and antique car collector, bought the company in 1982.