Atlanta’s Morris Brown College filed for Chapter 11 bankruptcy last week in an effort to prevent foreclosure.
According to court documents, the historically black school has more than $30 million in debts and was facing a property auction scheduled for this week. The bankruptcy will temporarily stop the foreclosure process and give the college time to come up with a repayment plan through an automatic stay.
According to the Atlanta Journal-Constitution, Morris Brown was facing foreclosure because of $13 million worth of bonds tied to the college. According to the Journal-Constitution, the 131-year-old college was issued bonds by the Fulton County Development Authority in 1996. The bonds were secured by several pieces of property on the college’s campus, including the school’s administrative building.
The school has had trouble paying its debts because of drops in enrollment and its de-accreditation. The school reportedly has 50 students enrolled for the fall term. The college lost its accreditation from the Southern Association of Colleges and Schools in 2002 because of its financial problems.
According to the Journal-Constitution, things were so bad financially for the college that it’s former president Dolores Cross pleaded guilty to embezzling federal funds by applying for money on behalf of students without their knowledge or consent. Cross reportedly used the money to pay the school’s operating costs. Cross was convicted of embezzlement for her role in the school’s financial problems.
For now, the school will try to hold on through bankruptcy. “The trustees are taking several deliberate actions to insure that we not only survive, but thrive,” Morris Brown board Chairman Preston W. Williams said to the Journal-Constitution. “Our commitment is to focus on restructuring and making it possible for us to survive another day.”
Throughout the week we will discuss the benefits of bankruptcy, including the differences between Chapter 11 bankruptcy and Chapter 7 and Chapter 13 bankruptcies. If you have large amounts of debt, bankruptcy is an option. Visit our website for more information about the benefits of bankruptcy, or call us at (202) 483-6070 to schedule an appointment.
Law Firm of Kevin D. Judd– Washington DC and Maryland bankruptcy attorney