ITT Educational Hires Liquidator After Government Crackdownby
For-profit college lost access to federal financial aid
Possible bankruptcy filing said to be under discussion
ITT Educational Services Inc., the 50-year-old for-profit college operator that recently shut down its 136 technical schools, has hired advisers to liquidate its assets, according to one of the firms brought in to handle the sales.
The Carmel, Indiana-based company, which ran campuses in 38 states, appointed turnaround specialist Alvarez & Marsal and law firm Faegre Baker Daniels, according to people familiar with the matter, who asked not to be identified because the process is private. A&G Realty, a real estate adviser, has also been hired, said the people.
“We are selling all the assets including the real estate,” A&G Chief Executive Officer Andy Graiser said in a phone interview.
Whether the liquidation will be handled in bankruptcy court or out is still being discussed and will be decided within days, the people said.
Reuters reported the hires earlier Thursday.
Faegre declined to comment. Representatives of Alvarez & Marsal didn’t respond to requests for comment on the matter. ITT CEO Kevin Modany didn’t respond to an e-mail seeking comment.
ITT joins other big for-profit college operators that collapsed under government scrutiny. Corinthian Colleges Inc. failed after the Education Department reduced its access to federal student aid, finding the company had falsified job-placement figures. Corinthian sold about half its campuses in late 2014 and closed the rest in April 2015 before filing for bankruptcy the following month.
ITT’s shutdown, meanwhile, was one of the largest in U.S. history, leaving over 35,000 students stranded. The school said it was forced to shut its doors after the Education Department demanded a steep increase in the security the company would have to post to guarantee federal student aid. More than 8,000 employees were affected, with the majority losing their jobs on Sept. 6.
Cerberus Capital Management told ITT this month that it was in default on a senior secured loan and demanded immediate repayment of the $34.5 million outstanding. The lender also exercised its control over ITT’s bank accounts, having any remaining cash balances transferred to Cerberus, according to a Sept. 14 regulatory filing.
Since August 2014, ITT has been under financial and operational scrutiny by the U.S. Education Department. The agency expanded its oversight in June, citing “significant concerns about ITT’s administrative capacity, organizational integrity, financial viability and ability to serve students.”