Test-Prep Company Education Holdings Files for BankruptcyAndrew Harris
Education Holdings 1 Inc., the test-preparation company formerly known as Princeton Review, filed for bankruptcy protection, a month after settling a fraud lawsuit with the U.S.
Education Holdings listed liabilities of $100 million to $500 million, as well as $100 million to $500 million in assets, in Chapter 11 court filings yesterday in Delaware. The company filed a so-called prepackaged reorganization plan that it said has already received approval from some creditors.
Senior secured claim holders, who are owed at least $36.3 million, second-lien facility claimants due $7 million and other noteholders owed more than $110 million will be allowed to vote on the plan submitted yesterday as the proposal impairs their claims, according to a court filing. The plan also requires bankruptcy court approval.
The U.S. Justice Department on Dec. 20 announced the settlement of a suit filed against the company in May in Manhattan federal court. The U.S. claimed that Princeton Review received tens of millions of dollars in federal funds for tutoring services to New York City school children that it didn’t provide. The U.S. said the settlement amount is as much as $10 million.
Robin Weinberg of Sard Verbinnen & Co., a spokeswoman for Framingham, Massachusetts-based Education Holdings, declined to comment on the bankruptcy filing.
Another company, TPR Education LLC, is now doing business as The Princeton Review. TPR Education, which purchased Princeton Review’s Higher Education Readiness unit on May 18, wasn’t sued in the U.S. case, it said in a statement last month. TPR Education didn’t buy Princeton Review’s Supplemental Educational Services division. It wasn’t part of yesterday’s bankruptcy filing, according to available court records.
Education Holdings said in its filing that as of Jan. 17 it had 100 percent approval of its proposed bankruptcy plan from holders of senior secured claims, second-lien facility claims and senior and junior note claims.
“The company has received a sufficient number and amount of votes in favor of the prepackaged plan,” according to the filing.
The company listed Bain Capital Venture Fund LP of Boston as its biggest equity security holder, with 9.7 percent. Falcon Investment Advisors LLC and Sankaty Advisors LLC are the biggest unsecured creditors according to the filing, which says each is owed $56.3 million. Liabilities to the Justice Department are “undetermined,” according to the filing.
The company didn’t file a schedule of assets and liabilities, seeking an exemption from the filing because its restructuring plan has already been approved, according to a statement from Chief Restructuring Officer Christian Kasper.
The case is In Re Education Holdings 1 Inc., 13-10101, U.S. Bankruptcy Court, District of Delaware.