Corinthian faces objection to disclosure from Department of Education

By Kali Hays

New York, July 15 – Corinthian Colleges, Inc. creditor the United States Department of Education (DOE) objected to the company’s combined Chapter 11 plan of liquidation and disclosure statement on Wednesday, according to filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Corinthian filed the plan and disclosure statement July 1, under which the company will be dissolved and a trust will be established to distribute proceeds to creditors.

The DOE’s initial point of contention lies with Corinthian being allowed to file a combined plan and disclosure at all, claiming that these types of filings are only allowed for smaller businesses with less than $2.5 million of assets. Claims against Corinthian exceed $274 million.

Central to the objection however, is the DOE’s claim that the plan disclosure does not provide adequate information and leaves treatment for unsecured creditors “undetermined.”

The DOE asked that more specific disclosure regarding the proposed distribution trust assets be provided including their value, along with more information on the proposed student refund reserve and “the circumstances under which these Chapter 11 cases arose,” according to the objection.

Without such changes and additional information, the DOE asked that the court deny approval of the disclosure statement.

A hearing is set for July 22.

Corinthian Colleges, a Santa Ana, Calif.-based post-secondary education company, filed for bankruptcy on May 4. The Chapter 11 case number is 15-10952.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.