Indiana Code Title 36. Local Government § 36-5-1-11

Sec. 11. (a) If the township in which a new town is incorporated is indebted or has outstanding unpaid bonds or other obligations at the time of the incorporation, the town is liable for and shall pay that indebtedness in the same ratio as the assessed valuation of the property in the town bears to the assessed valuation of all property in the township, as shown by the most recent assessment for taxation before the incorporation, unless the assessed property within the town is already liable for the indebtedness.

(b) The town shall pay its indebtedness under this section to the township executive.  If the indebtedness consists of outstanding unpaid bonds or notes of the township, the payments to the township executive shall be made as the principal or interest on the bonds or notes becomes due.