Education Corporation of America got their wish of out of control disaster.
The company owns Virginia College and New England Business and Finance and tried to be tricky to maintain access to federal student loan money by filing an action in federal court asking that a court-appointed receiver be appointed rather than just closing. Talk about being in denial.
Well, the court tossed out the request to be required to keep their access to federal student loan money and has just ruled that the company is so in the toilet that a Receiver will and has been appointed.
In its own court filings, Education Corporation of America gave proof they are failing, enrollment is plummeting, and they spend more on advertising than education.
Both faculty and students can hold out hope this is going to turn out well. I wish them luck on that reality.
On November 14th the court issued a temporary restraining order and named a Receiver to run the company, effectively taking over control of the company by a lawyer that will now run the company and determine if it is viable. The court-appointed Receiver is John F. Kennedy of Macon, Georgia. Certainly not one of the more common Receivers I’ve come across.
With the appointment of the Receiver, ECA has given up financial management of the schools.
The Receiver is “To operate ECA’s Business and the Receivership Property in the ordinary course and in compliance with applicable laws, regulations and rules, with a primary focus on financing of the business and other restructuring or sale transactions, with the delivery of academic services continuing to be performed by ECA’s current management as overseen by the Receiver and ECA’s current boards (including the independent board of New England College of Business and Finance, LLC (“NECB”)), provided, however, that, for the avoidance of doubt, consent of the Receiver shall be required for any sale, conveyance, or transfer of Receivership Property outside of the ordinary course of business.”
