The College of New Rochelle (CNR) was a non-profit, four-year college and graduate school founded in 1898. Since its establishment it operated as a liberal arts college, renowned for its nursing program, and served the needs of over 90,000 students. The school historically prided itself on serving underprivileged and first-generation college students, and had its main campus in New Rochelle, New York, with five satellite campuses located throughout New York’s boroughs. Over the last two decades, however, the student population shrank from about 8,000 to 3,000 full-time students.
CNR also had to respond to extremely difficult financial challenges upon the discovery of financial malfeasance, when the Board of Trustees initially learned that CNR may have failed to pay federal, state, and local payroll taxes for a two-year period. At that time, the Board of Trustees formed a Special Committee to investigate further.
The investigation turned up additional misconduct, including:
- Misappropriation of government grant money
- Unauthorized use of endowment funds
- Failure to make payments to creditors and routinely bouncing and kiting checks
- Active concealment of CNR’s true financial situation by refusing to provide information, making misrepresentations, and issuing false financial information
Despite significant efforts by CNR, the financial challenge was ultimately insurmountable. A search for a wind-down partner was successful. A Teach-Out Agreement was signed with Mercy College and an Agreement of Mutual Cooperation followed shortly thereafter.
To help expedite the wind down and open an improved line of communication with its senior lenders, CNR engaged Getzler Henrich (“GH”) as Chief Restructuring Officer to guide pre- and post-Chapter 11 wind-down efforts.
GH assisted CNR in:
- Winding down the five satellite campuses
- Initiating a sale process to sell, the New Rochelle campus
- Maintaining academic operations throughout the transition
- Maintaining statutory accreditation so that graduations could be successfully completed
- Negotiating a two-year campus lease with Mercy College for the New Rochelle campus
- Coordinating the transfer of approximately 1,700 students to Mercy College
- Transferring 115-years of college and student records to permanently responsible parties
GH continued working with CNR throughout the Chapter 11 process to achieve the highest possible recovery for CNR’s creditors through the sale of assets, and is continuing the wind down and liquidation process through a post-confirmation trust.