A bankruptcy judge said St. Augustine’s is “essentially closed” as the school loses accreditation, federal aid access and plans for fall online certificate programs.
By Taylor Jennings-Brown
Q City Metro
https://www.qcitymetro.com/
Saint Augustine’s University has canceled all classes for the fall semester as the Raleigh HBCU reorganizes under Chapter 11 bankruptcy protection to address roughly $74 million in debt, according to published reports.
The decision marks an operational shutdown for the 159-year-old historically Black university. In December 2023, the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC) voted to revoke Saint Augustine’s accreditation, citing financial and governance noncompliance. And after nearly two years of appeals and court injunctions, the university sought bankruptcy protection on April 27. The bankruptcy petition led the university to drop its lawsuit against SACSCOC, resulting in the loss of its accreditation and access to federal financial aid.
Under Chapter 11, a business or organization may continue to operate while reorganizing its finances to repay creditors over time. Officials at Saint. Augustine’s could not be reached for comment.
During an Aug. 20 bankruptcy hearing, university officials confirmed that no classes would be offered this fall, WRAL reported. Students had been scheduled to return Aug. 26.
U.S. Bankruptcy Judge David Warren characterized the university as “essentially closed” during the hearing, citing concerns about its ability to meet academic obligations while managing nearly $300,000 in monthly expenses. Plans to generate revenue by launching eight online certificate programs this fall were dissolved under court scrutiny.
According to WRAL, Judge Warren also agreed to stay a pending employment discrimination lawsuit filed by former President Christine McPhail and former board members Brian Boulware and James Perry. McPhail filed suit in December 2023 with the federal Equal Employment Opportunity Commission following her termination.
Under the university’s bylaws, Saint Augustine’s is required to cover legal expenses for board members, according to university attorney Ciara Rogers. But Judge Warren granted a stay to protect the school’s limited cash, calling the potential legal costs “too much of a risk for the university,” according to WRAL.
Judge Warren criticized former university leadership after learning that the school lacked liability insurance to protect directors and officers and to absorb management-related legal claims, WRAL reported.
“I’m just astonished people in a fiduciary capacity for a university did not have a D&O policy,” the judge was quoted as saying. “What else is out there that I don’t know about, or the public doesn’t know about?”
Rogers noted that the institution is operating under a restructured board and new leadership.
To stabilize its financial footing, Saint Augustine’s is seeking court approval to retain a real estate firm to assist with the potential sale or redevelopment of portions of its 105-acre campus. Both the primary lender and the federal bankruptcy administrator have voiced initial reservations about the proposed deal.
Taylor Jennings-Brown
Editor
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