Institutions of Higher Education and Access to Bankruptcy: Are Things as Simple as They Seem?

May 18, 2015

Recently, Corinthian Colleges, Inc., one of the United States' largest for-profit educational conglomerations with 72,000 students across 107 campuses, filed (along with 25 affiliated subsidiaries) a chapter 11 voluntary petition for bankruptcy protection. Corinthian reported $19.2 million of total assets and US$143.1 million of total debts, and plans to liquidate. The general consensus seems to be that federal law makes bankruptcy reorganization all but impossible for educational institutions because, per nonbankruptcy federal statutes and regulations, filing for bankruptcy makes the institutions instantaneously ineligible to receive federal student loan funding. But things may be more complicated—and a little rosier for colleges and universities—than the perceived wisdom assumes.

Read "Institutions of Higher Education and Access to Bankruptcy: Are Things as Simple as They Seem?"