In 2002, Morris Brown College, a historically Black educational institution in Atlanta, lost its accreditation due to an unstable financial position. The loss of accreditation meant that students at the college could no longer qualify for federal financial aid. Since that time, the college has struggled to remain open. Enrollments have dropped from 2,500 to about 50 students. Much of the campus is in disrepair and many of the college’s buildings have been boarded up.
In 2012, the college filed for bankruptcy. Chapter 11 of the U.S. Bankruptcy Code offers protection to businesses who are unable to pay their debts. The code gives them time to submit a reorganization plan and protects their assets during the process.
Now the college has filed a reorganization plan with the bankruptcy court. Under the plan a limited liability corporation would buy some of the college’s property and assume some of its outstanding debt. Some $7.5 million would be used to pay off debt and another $7.5 million would pay bond holders of the properties being purchased from the college. In addition, $5 million would be available for operating costs that hopefully would allow the school to regain its accreditation.
Representatives of the college will appear in court on August 1 to defend the reorganization plan which must be approved by the judge in charge of the bankruptcy proceedings.
