The for-profit education industry was dealt a blow last month when ITT Educational Services filed for Chapter 7 liquidation.
The move came after the debtor suffered from a series of fraudulent lending practice allegations from federal and state attorneys general, as well as regulatory bodies including the Department of Education. The Carmel, Indiana-based for-profit college operator was accused in recent years of making fraudulent loans under its student lending programs. Similar issues arose in the 2014 bankruptcy filing of Corinthian Colleges.
A bankruptcy filing strips for-profit school operators of their access to federally backed Title IV funds, which they are dependent on to run their institutions. Thus, Chapter 11 is a means for these companies to find a suitor or, as in the case of ITT, liquidate in Chapter 7, as opposed to reorganizing as a going concern.
Joseph D’Angelo, a partner with Carl Marks Advisors, joined with Debtwire to discuss these issues and more on this month’s edition of the Middle Market Junction. D’Angelo previously represented the secured lenders in Corinthian’s bankruptcy filing.
Click here to listen to the podcast.