(The Center Square) – Debt plagued St. Augustine’s University, among the oldest historically Black colleges and universities in the country, filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the Eastern District of North Carolina.
The $50 million to $100 million owed to creditors by the university of approximately 1,000 undergraduate students includes debts of $14.4 million to the IRS, more than $7 million to other federal agencies including the Department of Education, and $1.6 million to the North Carolina Department of Revenue, according to the filing.
Another $3.3 million is owed to the American Trust Company, a retirement organization.
“Chapter 11 provides a comprehensive path to address our financial challenges and move forward with a stronger foundation,” said a Tuesday statement from the university’s Board of Trustees.
Dr. Jennie Ward-Robinson, the interim president, has resigned and been succeeded by the appointment of Dr. Verganis Peoples also on an interim basis.
Six main types of bankruptcy exist within Title 11 of the U.S. Code. Reorganization via Chapter 11 is among them, as are liquidation in Chapter 7 and individual repayment plan in Chapter 13. Chapter 9 (municipalities), Chapter 12 (family farmers, fishermen) and Chapter 15 (cross-border) are the others.
“The university will continue to operate throughout the process, and a plan of reorganization is being developed to be submitted to the court outlining SAU’s path forward,” the university said. “SAU enters this process with the support of its primary lending partner, Self-Help Ventures Fund, demonstrating confidence in the university’s future.”
Litigation on its accreditation status expires May 15 and will not be continued, the university said. The university said students enrolled will need to finish degrees at another accredited institution.
Students close to graduating will be offered “teach-out” agreements. This means a formal, written contract between two higher education institutions ensures that if one institution or program closes, the current students can complete studies elsewhere without interruption or additional costs. There is a guarantee of credit transfer, admissions and similar tuition rates.
Baccalaureate and honors cord ceremony and commencement for the private university is set for Saturday on Mother’s Day weekend.
The institution, on about 105 acres in downtown Raleigh, was founded in 1867 by the Episcopal Diocese of North Carolina and remains operational and accredited for this semester. Shaw University (1865), also in Raleigh, is the oldest HBCU in the state and the South.
