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Morris Brown College Files for Bankruptcy to Avoid Foreclosure

Tuesday, August 28, 2012 8:12

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(Before It's News)

Atlanta’s Morris Brown College has filed for Chapter 11 bankruptcy in an attempt to avoid foreclosure, The Atlanta Journal-Constitution reports.

The 131-year-old college is more than $13 million in debt. The campus was set to be foreclosed upon next week, but bankruptcy protection will probably halt the foreclosure proceedings.

The school fell on hard times after losing its accreditation a decade ago, according to 11 Alive. There are currently only 50 students enrolled at the college. Still, school officials insist that bankruptcy isn’t the end of Morris Brown.

“The trustees are taking several deliberate actions to [ensure] that we not only survive, but thrive,” board Chairman Preston W. Williams said about the Morris Brown College bankruptcy, according to the AJC. “Our commitment is to focus on restructuring and making it possible for us to survive another day.”

When a debtor files for bankruptcy, he or she (or in this case, the college) is granted an automatic stay. The automatic stay places a temporary hold on all creditors’ collection efforts, including foreclosure proceedings.

Bankruptcy protection will put a hold on the foreclosure while Morris Brown restructures. In a Chapter 11 bankruptcy, the debtor company or institution creates a plan of reorganization to detail how it plans to shed its debt and become profitable again. In order to do so, the debtor often closes certain branches, merges with another company, renegotiates its contracts, or sells off assets.

Morris Brown’s president Stanley Pritchett is confident that bankruptcy protection will give the school the help it needs to get back on its feet. “We are making a statement that Morris Brown College is not going anywhere,” Pritchett said, according to the AJC. “We are not going to allow this latest challenge to get in the way of what we are trying to do.”

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