💥Bad Education💥

Education-related filings have been filling up dockets over the past several weeks.

Today’s edition is brought to you by your years’-long (ab)users of the em dash. That’s right, you can go back and check: this ain’t no AI nonsense up in here. It’s great that the kids are finally learning how to write, though.

Speaking of “learning,” today we dive into a number of recent education-related chapter 11 bankruptcies. Let’s get into it.

---

💥New Chapter 11 Bankruptcy Filing - Corvias Campus Living - USG, LLC💥

Source: corvias.com

On June 25, 2025, Rhode Island-based Corvias Campus Living - USG, LLC (the “debtor”) filed a chapter 11 case in … huh? … *checks notes, 🤔* … the District of Delaware (Judge Silverstein); it falls under the larger Corvias Group, LLC umbrella, a property management company that works with more than 15 higher education institutions across six states and the US military. This particular entity has been working pursuant to a partnership agreement (the “agreement”) with the Board of Regents (“BOR”) of the University System of Georgia (“USG”) since ‘15, operating and managing the USG Student Housing Program across nine campuses totaling ~10k student beds and over 3mm square feet of living space.*

The agreement, by all accounts, seems rather straight-forward. The BOR collects student housing revenues and forwards the money over to the debtor. The debtor then uses those funds to take care of the BOR’s base rent, fund reserves for repairs/replacements, and pay operating/maintenance expenses. After satisfying all of those obligations, the debtor can then take a 2% management fee (on gross revenues) and up to 2.25% as a variable incentive fee.

Doesn’t sound patently unreasonable, right? How hard could it be to manage accommodations filled with thousands of partying college students??

Source: GIPHY, go bulldogs!

Lol …

Source: GIPHY

And it also got pretty expensive.

In the past few years, the partnership with the BOR has become increasingly unsustainable due to inflation and low occupancy. In response to the shifting macro environment the debtor claims that the BOR has done … well … they haven’t done sh*t. Here’s a tidbit from the first day declaration of the debtor’s president, Thelma Edgell:

“In particular, (A) the BOR has not allowed annual increases in student housing fees to keep pace with the market and rising costs (including the fixed rent and charges payable to the BOR that increase annually by 3%), and (B) student occupancy levels have declined.”

But really can you blame the BOR for not wanting to raise tuition when (a) demand is down and (b) students already face insane student loan payments?

Source: educationdata.org

Ok, fine, but what about that 3% escalator per year on the fixed rent and charges payable to BOR? Surely, the BOR can be reasonable about that given the student body issue, yeah? YEAH???

Nah, the debtor says the BOR hasn’t budged.

Back to Ms. Edgell’s first day declaration:

“Underlying the USG Student Housing Program was an expectation that the parties in this public private partnership would collaborate to ensure that revenue kept pace with market and operating expenses and debt service. Fundamental to any P3 partnership is a presumption that the parties act collaboratively and in good faith to ensure that revenue and costs are aligned. Despite the Debtor’s repeated requests, attempts, and invitations, however, the BOR has steadfastly refused to work collaboratively with the Debtor (and the Noteholders) on a solution that would make the P3 relationship and the USG Student Housing Program viable now and into the future. The Debtor cannot continue to be the sole party bearing the burden of this unsustainable arrangement and is therefore looking to this process to achieve a comprehensive solution.”

“Good faith” … good one guys.

A stagnating gross revenue number and steadily increasing costs … well you don’t need to be a math wiz to figure out where that goes.

Source: GIPHY

Things got so bad that the debtor has only been able to collect two months worth of management fees since … wait for it … the year two-thousand-motherf*cking-twenty (2020): there was nothing but a 🍩 available for distribution to the debtor after accounting for all the line item expenses.

Source: GIPHY

Did you catch that 👆 reference to noteholders. That’s right. This thing gets worse.

Not only did the debtor bleed money from piss poor general operating activity, it also contributed $22.8mm of cash from its own balance sheet and issued $548.3mm worth of 5.3% senior secured notes just to kickstart the program.** The debtor used $174.6mm of those funds to construct an additional 3.7k beds across the seven USG campuses, renovate 6.2k existing beds, and … wait for it … JFC … pay off $312mm of BOR’s pre-existing debt.

Source: GIPHY

In addition, the debtor also invested capital over the past few years to cover cash shortfalls and otherwise support the housing program.***

Source: GIPHY

And wait … it gets worse(r). (👈 ChatGPT right there … jk).

The notes have been in default for ~4 years now and the oh so gracious noteholders have allowed the debtor to keep using cash (collateral) to maintain its operational needs. And despite work to get to a resolution, four years of work have resulted in … nothing (hence the filing).

In fact, the noteholders and the debtor had recently worked out a bridge that would’ve covered operations until the fall. The noteholders were intent on pursuing an out-of-court solution. Here’s Eversheds Sutherland LLP’s Todd Meyers, on behalf of the noteholders during the “first day” hearing … held seven days after the filing … on July 2, 2025:

“Our belief being that while we were frustrated at the lack of resolution, that an out-of-court solution ultimately should still be given a chance. The debtors obviously felt differently, and they filed bankruptcy last Wednesday to the surprise of the note holders as well as the BOR. Obviously, because it was a surprise, there was no agreement on the use of cash collateral and, frankly, no exit strategy. It was a true free-fall bankruptcy.” (emphasis added)

Lol, the debtor be like:

Source: GIPHY

Of course none of this stopped the debtor from filing an initial cash collateral motion, arguing that the noteholders were adequately protected — even though negotiations with the noteholders hadn’t even commenced. Suffice it to say, the noteholders, still surprised by the filing in the first place, disagreed.**** Remember: there are basically no hard assets here,***** the debtor’s entire business is a singular contract that, as you’ve learned already, is completely unsustainable. Thus, the noteholders’ only “hard collateral” is the debtor’s cash balance.

Back to Mr. Meyers:

“We believed then, and we believe now, that we cannot be adequately protected for the use of our cash collateral on a non-consensual basis. And therefore, absent our consent, cash collateral could not be used.”

So uh … what then? Litigation?

Luckily no. The parties were able to hash out something the night before the hearing that put some of the noteholders’ issues to rest.

Under the second consensual cash collateral order, the debtor is working with $25mm in cash and will see that number dwindle down to $10mm in four weeks. Of that $15mm decline, the debtor has allocated $6mm towards operating expenses and professional fees, with the remaining $9mm earmarked as adequate protection payments for the noteholders.

In addition to the adequate protection payments, the debtor is also promising to deliver on certain milestones. The debtor will have to (i) file a mediation motion within 14 days of the petition date, (ii) obtain a subsequent order requiring the mediation within 30 days, and (iii) procure a binding term sheet within 60 days. We can’t wait to see the presumably bureaucratic BOR hop-to.

Speaking of the BOR, they had thoughts — per Troutman Pepper Locke LLP’s Gary Marsh:

“You know, the BOR doesn't believe it's our fault if you know Corvias now thinks they made a bad deal 11 years ago or that the note holders made a bad loan. You know, they're out $660mm, the 25 million cash collateral is peanuts really because you know If they let the whole thing collapse and they disappear, they get zero — we have our dorms. So I don’t really think that’s happening.”

While the BOR doesn’t believe the noteholders will just walk away with their cash, what’s the other option? Having the noteholders step in and takeover the agreement with the BOR? An agreement that has already proven to be a cash incinerating dumpster fire? Judge Silverstein double-checked …

“I assume that the board is in agreement that the contract is an uneconomic one for the debtor?”

… and Mr. Marsh had this to say:

“You know, I actually think, you know, if the note holders made significant concessions, they could right-size the debt to match the project and then it would be economical for Corvias.”

So yeah, maybe there’s a chance the noteholders can actually turn this around if they do step in, 🙄!

Source: GIPHY

Oh and if you were scratching your head at the choice of venue — wtf does this debtor have anything to do with Delaware — you aren’t the only one. Back to Mr. Marsh:

“I did want to tell you, I did want to mention, and I did tell counsel this morning — all of the counsel — that we are filing a motion to change venue. It’ll be filed no later than Friday. Maybe tomorrow at the earliest and we’d want that set either on the second day hearing or perhaps sooner if the court thinks that’s best.”

He continued:

“The debtor has no employees, there’s no assets in Delaware. All the assets are in Georgia, it’s like a big single asset real estate case. On their top 20 unsecureds, 11 are Georgia. All their utility companies are Georgia. All the insurance is insuring Georgia assets. They’re headquartered in Rhode Island.”

And bam, here it is, the BOR’s motion to transfer venue to the Northern District of Georgia. Judge Silverstein will hear the venue change motion at the second day hearing on July 28 at 2pm ET, which also marks the expiration of the consensual use of cash collateral.

All of which makes for a potentially meaty next hearing. Stay tuned.

The debtor is represented by Morris, Nichols, Arsht & Tunnell LLP (Derek Abbott, Matthew Talmo, Tamara Mann, Brenna Dolphin, Brianna Turner) as legal counsel, CohnReznick Advisory LLC (Eric Danner) as financial advisor, and Holland & Knight LLP as special counsel. The “Corvias Noteholder Group” is represented by Eversheds Sutherland LLP (Todd Meyers, Renée Dailey, John Ramirez, Andrew Polansky) and Potter Anderson & Corroon LLP (Jeremy Ryan, James Risener III, Sarah Gladieux) as legal counsel and FTI Consulting Inc. ($FCN) as financial advisor. The BOR is represented by Troutman Pepper Locke LLP (David Fournier, Gary Marsh, Pierce Rigney). Collateral agent U.S. Bank NA is represented by Shipman & Goodwin LLP (Kimberly Cohen). Corvias Group, LLC, Corvias, LLC, and Corvias Corporate Services, LLC are represented by Landis Rath & Cobb LLP (Adam Landis, Colin Robinson, Katherine Dute) and Goulston & Storrs PC (Douglas Rosner, Timothy Carter) as legal counsel.

*The debtor relies on non-debtors, Corvias Group, LLC, Corvias, LLC, and Corvias Corporate Services, LLC to provide certain shared services like marketing, bookkeeping, and IT. The debtor itself has no employees.

**The notes are secured by liens and leasehold mortgages on all of the debtor’s assets, including the debtor’s leases on the student housing facilities. As of the petition date, there’s $526.7mm of principal outstanding and >$100mm in accrued interest at the default rate.

***In total, the debtor estimates that the value added from the construction work done by the debtor is >$170mm.

****The noteholders, however, did agree to the payment of over $2.2mm to the BOR in connection with a first interim order authorizing the use of cash collateral, entered before the first day hearing on June 30, 2025.

*****The noteholders have a leasehold mortgage emanating out of the agreement but everyone agrees that, given that the debtor owns no real estate, that this is an “empty bucket.”

---

---

💥New Chapter 11 Bankruptcy Filing - Charter School Capital Inc.💥

Since we’re on the topic of education, here’s another one. This one’s random AF but these days we’ll take anything over biotech or solar, 👍.

Back on June 6, 2025, Oregon-based Charter School Capital Inc. (“CSC” or the “debtor”) filed a chapter 11 case in the District of Delaware (Judge Goldblatt); it is a consultancy that supports the charter school industry by providing development, financing, and other services to charter school leaders across the US* through its three creatively named, 🙄, business segments:

📍“Money To Buy Your School.” LOL. Pursuant to this segment, the debtor acquires various properties through special purpose entities (“SPEs”) via debt and equity financing and then leases the property to charter schools. The debtor currently owns and manages eight properties throughout the country.

📍“Money To Run Your School.” LOLOL. Through this non-debtor subsidiary, Public Charter School Receivables Company, LLC, CSC provides receivables financing to schools, financed via a Bank of America N.A. (“BofA”) note purchase agreement.

📍“Kids To Fill Your School.” LOLOLOL. This segment name stirs a whole lot of “ick” for a “marketing” arm. The debtor provides services like enrollment marketing and website support to charter schools.

So what went wrong? To answer that we need to dive a little deeper into the debtor’s business, specifically the Money To Buy Your School segment … which has a weird municipal finance component.

Source: GIPHY

That’s right. Municipal finance.

The debtor’s business model relies upon exiting real property investments by selling them to charter schools (or other non-profit organizations) who finance their purchase of said real property through the issuance of municipal bonds. That’s right: it turns out that the municipal bond market is a very popular source of funding for charter schools because the cost of getting a school up and running can be significant and a good chunk of expenditure gets sunk into land/construction. Indeed, it’s so popular that the fine folks at Orrick, Herrington & Sutcliffe LLP have actually published a lengthy primer on it. Enjoy your summer reading, y’all!

The debtor, of course, isn’t eligible to issue muni bonds itself. Instead, it offers charter schools a ready-to-go school that allows founders a low-friction way to get things off the ground with minimal upfront commitments. All the charter schools need to do is enter into a lease agreement with the debtor.

According to the National Center for Charter School Accountability, ~26% of charter schools shut down within five years of opening, so a lease agreement can be a popular way to “test the waters” so to speak. But if the charter school did prove to be successful, it could then move to secure municipal bond financing and purchase the property from the debtor. In other words, the municipal bond market is crucial for charter school growth. Unfortunately for the debtor, the municipal bond market — particularly that portion of it backing charter schools — has seen better times:

Source: Bloomberg.

In ‘24, the municipal market recorded 185 impairments, the most since ‘21, and 45 of those impairments were attributable to charter schools, 😬. Per Bloomberg:

“A combination of factors drove the troubles for charter schools. Inflationary pressures, a dwindling pool of students due to the declining birth rate and the roll-off [of] Covid-era stimulus dollars weighed on the sector. Higher interest rates made debt restructurings more difficult and inflation increased labor costs.”

No. Bueno. Someone call Elon Musk! We need some babies to service the muni debt, y’all!

Source: Pew Research Center

So in the face of these headwinds, the debtor brought on two restructuring veterans Edward Weisfelner** and Craig Jalbert*** to form a restructuring committee. As part of their mandate, the restructuring committee was tasked with evaluating possible strategic alternatives.

And in April ‘25, a potential acquirer approached the debtor. Unfortunately, after some due diligence, the potential acquirer decided that it would prefer an in-court 363 sale instead, which brings us to the petition date. The debtor, with the help of its financial advisor, Rock Creek Advisors LLC (“Rock Creek”), filed with a plan to run a 38-day process, hoping that the potential acquirer would step up and become the stalking horse purchaser.

To fund that process, the debtor originally planned to use its $1.29mm cash balance and money generated through its ordinary course business operations — including revenue from the Money To Run Your School segment. Since the petition date, however, BofA had other ideas; it declined to provide any further funding, effectively handicapping the debtor.

Source: GIPHY

The restructuring committee had no choice but to unleash Rock Creek to turn over every stone for financing.

Which it did! Rock Creek ultimately came back with a singular binding proposal from East West Bank ($EWBC) for a $5mm new money DIP facility of which $2.5mm is available on an interim basis with the remainder available upon a final order. The DIP matures on August 6, 2025 and carries a 12% interest rate PIK, 2.5% upfront fee, 5% exit fee, and a 2% maturity extension fee (if necessary).****

But that’s not all. The stalking horse bid also came through. On July 2, 2025, the debtor filed a notice of stalking horse bidder — New GS, LLC, an affiliate of American Infrastructure Partners, with a $80.7mm stalking horse bid.

We now look forward to a July 16 bid deadline and a July 25 sale hearing at 3pm ET.

The debtor is represented by Goodwin Procter LLP (Howard Steel, Kizzy Jarashow, Stacy Dasaro, James Lathrop) and Potter Anderson & Corroon LLP (Aaron Stulman, Brett Haywood, James Risener III, Ethan Sulik) as legal counsel, Rock Creek Advisors LLC (Brian Ayers, Jim Gansman, Tim Peach) as financial advisor, and its restructuring committee is made up of Edward Weisfelner and Craig Jalbert. East West Bank is represented by Norton Rose Fulbright US LLP (Robert Hirsh, Francisco Vazquez) and Morris James LLP (Eric Monzo, Jason Levin) as legal counsel. Orthogon Charter School Special Opportunities LLP, Orthogon Charter School Special Opportunities II, LP and Orthogon Charter School Special Opportunities III, LLC are represented by Beys Liston & Mobargha LLP (Joshua Liston) and Landis Rath & Cobb LLP (Matthew McGuire).

*The debtor was founded by former Bain & Company consultant, Stuart Ellis, who has previously dabbled in random ventures like trading cards and pop rocks. No seriously, from his bio:

“Stuart was — what he calls — a ‘lemonade-stand kid,’ always finding creative solutions and serving the needs of the community. As a grade schooler, he made a business selling Pop Rocks to his classmates on the playground.”

Good thing this case is flying under the radar. The X crowd is merciless when it comes to the strategic consultant types, especially when it’s a former Pop Rocks hustler as well. The memes would’ve been incredible.

Source: @ConsultingHumor on X

**Sheesh. Smoke em’ if you’ve got em’.

***This is a name that’s been popping up quite a lot this year, see, e.g., here and Cold Spring Acquisition LLC.

****The debtor has no funded indebtedness but has guaranteed certain obligations of an indirect non-debtor subsidiary in an amount of $8.5mm. Right beneath that sits ~$700k in unsecured trade debt and a $3mm arbitration claim obligation that originates from a prepetition dispute with a preferred shareholder. The arbitration claim obligation is the result of prepetition preferred shareholders, Orthogon Charter School Special Opportunities LLP, Orthogon Charter School Special Opportunities II, LP and Orthogon Charter School Special Opportunities III, LLC (“Orthogon”), disputing a sale and refinancing transaction the debtor undertook in November ‘24. There were also issues with the debtor providing Orthogon with erroneous financial due diligence related to a preferred share issuance.

---

💥New Chapter 11 BK Filing - Higher Ground Education, Inc.💥

And, finally, back on June 17, 2025, Houston-based Higher Ground Education Inc. and 34 affiliates (collectively, the “debtors”) filed chapter 11 bankruptcy cases in the Northern District of Texas (Judge Larson) — and, no, Tom Califano and Sidley Austin LLP are not in the mix. Rather, it’s the fine folks at Foley & Lardner LLP (Holland O’Neil, Timothy Mohan, Nora McGuffey, Quynh-Nhu Truong) serving as debtors’ counsel and — G-d bless! — these absolute legends have even provided us with a docket-filed presentation to get the lay of the land! Yay, pretty graphics!!

The debtors were formed in ‘16 by a team of veteran educators with the mission of achieving Montessori education “at scale.” If you’ve never heard of the Montessori educational approach, it was developed in the early 20th century by an Italian physician, Maria Montessori, and stresses a “child-centered educational approach” — whatever that means. LOL, JK, we know a good chunk of you are alpha-dog New Yorkers and Angelinos who very much know what “child-centered educational approach” means. Means to your wallet, LOL.

Regardless of your thoughts on teaching philosophy, the debtors did grow rapidly and by ‘24 were the largest owner and operator of Montessori schools in the world with 150 schools, and even expanded internationally to China, Canada, and Europe.* Check out this rapid expansion 👇:

Source: Docket #15

Unfortunately, despite (or, rather, because of) the debtors’ rapid growth, the business has NEVER generated a single cent of positive cash flow from operations (see first chart 👇) — a reality driven, in large part, by the debtors’ extensive and expensive lease footprint (see second chart 👇):

Source: Docket #15

Source: Docket #15

Naturally then, it would make sense to attempt a restructuring of these lease agreements. In August ‘24, the debtors kickstarted that process; they decided to pause all rent payments and brought on Keen-Summit Capital Partners LLC (“Keen Summit”) to help with an overall lease restructuring plan. The debtors ended up executing ~120 lease amendments, which represented the majority of the debtors’ leases, and, for the remaining leases, worked with landlords to transition operations to a new tenant.**

Unfortunately …

Source: GIPHY

Actually, it wasn’t even close to being enough. Here’s the debtors’ interim president, Jonathan McCarthy, in his first day declaration:

“While the Lease Restructuring provided short-term benefits for the Debtors’ cash flows, it ultimately was not sufficient to offset ongoing losses. Even with the cash flow savings, the Debtors were unable to achieve positive cash flow from operations.”

Really makes you wonder where all of that high priced tuition goes, doesn’t it?

Anyway, even so, certain members of the debtors’ Board still wanted to continue pursuing growth:

“Beginning in 2024 and continuing in 2025 the Debtors experienced significant changes with respect to their Board and management resulting from general disagreements over strategy, growth, capital raising, and leadership. While certain Board directors wanted the Debtors to transition to a mature, stable, and profitable operators, other directors believed the best path forward was continuing the ‘hyper-growth’ strategy that required significant capital to fund expansion.”

LOL, this is what happens when your kids’ “child-centered educational approach” is powered by the vest-wearing venture bros (and their broheims at the growth equity shops) — including here, a firm called Learn Capital, which last held 49% of the debtors’ equity and had two board seats in early ‘25.

And due to the continual cash burn, the debtors had to repeatedly tap funding in order to keep operations afloat. Since ‘20, the debtors have raised over $335mm in equity and debt funding, ending up with a debt stack that at one point looked like this …

Source: Docket 36

… and, now, as of the petition date and after a number of foreclosures (discussed below), looks like this:

Source: Docket 36

Whoa boy. What happened??

Well, finally, in early ‘24 the debtors hit a financing brick wall. Both Rothschild & Co US Inc. and Barclays Capital Inc. ($BARC) were unable to secure debt or equity financing and then an early ‘25 attempt by SC&H Capital to pursue a sale and potential debtor-in-possession financing also failed. There were a few investors that did approach the debtors directly following the news of several school closures, but their proposals were at “fire sale prices” and were, according to the debtors, not actionable.

So sh*t started hitting the fan.

Source: GIPHY

By March ‘25, notices of default started rolling in and three of the debtors’ lenders foreclosed on the vast majority of the debtors’ assets.

Source: GIPHY

WTI Fund X, Inc., managed by Western Tech Investment (“WTI”), and lender under the WTI loan agreements, sent the first notice. At the time, WTI was owed $27.8mm and moved to foreclose on its collateral. On March 22, 2025, WTI executed a sale agreement with Learn Capital affiliate, Guidepost Global Education, Inc. (“GGE”), for the foreclosed assets in an amount of $23.1mm. As of the petition date, WTI maintains a $4.7mm secured claim against the debtors.

Due to the WTI default, the debtors cross-defaulted under the $3.8mm Learn Fund XXXVII promissory note. The promissory note was secured by a first lien security interest in certain of the debtors schools and, similar to WTI, Learn Capital moved to foreclose and sell its collateral. On April 23, 2025, Learn Capital sold the underlying assets to Cosmic Education Americas Limited (“CEA”) and, after accounting for the proceeds, maintains an unsecured claim of $410k as of the petition date.

Source: GIPHY

Yu Capital, and its affiliates, started sending their default notices in March ‘25 as well and ultimately sold most of their respective foreclosed collateral via public auctions. As of the petition date, the debtors still owed ~$6.3mm under the various Yu Capital loans, all of which are now considered unsecured obligations.

All of which begs an obvious question: why didn’t the debtors just file for bankruptcy earlier in the face of all of this chaos and get the benefit of the Bankruptcy Code’s automatic stay? For that answer, we turn to Foley & Lardner LLP’s Timothy Mohan, on behalf of the debtors, during the first day hearing:

“And the debtors did consider filing a TRO, filing a bankruptcy case to prevent the foreclosures, but they knew that if they did that, a public fight would lead to irreparable harm to the brand. We all know that the most important piece for schools and families is trust and the ability for families to rely on the ongoing operations of those schools. If there's uncertainty, parents will begin looking for alternatives for their students, for their kids, and they will ultimately remove their kids from those schools. So a public fight would have led to a run out of the schools.”

We’ve contemplated “bank runs” before but never “kid runs”! 😬

Following the series of foreclosures, the debtors desperately needed liquidity to meet their working capital needs. This resulted in the debtors selling a few schools to CEA in May ‘25 for $1.2mm and issuing $2.2mm in a purchase option note to Learn Capital in April ‘25. CEA ended up acquiring the purchase option note from Learn Capital on May 8, 2025 and exercised the $2.3mm purchase option.

When all was said and done and the lenders were finished doing their thing, the debtors were left with just seven schools — 🔥repeat JUST SEVEN SCHOOLS 🔥 — the future of which will be dealt with in these cases.

But good news! There’s a restructuring support agreement (the “RSA”) with the majority of stakeholders including 2HR Learning, Inc. (“2HR”)(a prepetition lender who’s acting as plan sponsor), Learn Capital, Ramandeep Girn (cofounder and lender), Yu Capital, and others.

To get to the RSA and bridge to the filing of these cases, YYYYY, LLC (“Five Y”), an affiliate of 2HR, and GGE each funded a bridge loan a day prior to the petition date on June 16, 2025. Five Y contributed $500k in the form of a senior prepetition bridge loan and GGE contributed $1.5mm in the form of a prepetition junior bridge loan. The debtors are proposing to roll-up both those bridge loans as part of an $8mm headline DIP comprised of (i) Five Y’s senior DIP facility totaling $5.5mm ($2mm interim) and (ii) GGE’s junior DIP facility totaling $2.5mm ($800k interim). Both DIP facilities carry a 9% interest rate without any exit/commitment fees.

As for the RSA, it’s already been baked into an on-file disclosure statement and plan. In brief, 2HR will be the ultimate owner of the reorganized debtors (aka the seven remaining schools).*** And importantly, in an attempt to provide some recoveries to unsecured creditors (so long as they accept the plan — it’s a death trap!), the RSA parties are waiving their rights to plan distributions with the exception of Mr. Girn, who’s receiving $500k on account of his CN-3 notes claim. GGE will also be “returning” to the reorganized debtors certain curriculum assets and IP assets that were originally acquired by GGE through the WTI foreclosure. Proposed releases abound, 👍🤡!

Under the DIP milestones, the debtors have 105 days from the petition date to receive disclosure statement and plan approval with a plan effective date no later than September 30, 2025. Parties will convene for a second day hearing on July 21 at 9:30am CT. Between now and then, we reckon an official committee of unsecured creditors will get in on this action and start turning over some tables.

The debtors are represented by Foley & Lardner LLP (Holland O’Neil, Timothy Mohan, Nora McGuffey, Quynh-Nhu Truong) as legal counsel, and SierraConstellation Partners, LLC (Sean Corwen) as financial advisor. YYYYY, LLC and 2HR Learning, Inc. are represented by Cozen O’Connor (Trevor Hoffman, David Kirchblum, Frederick Schmidt) as legal counsel. Guidepost Global Education, Inc. (Learn Capital) is represented by Kane Russell Coleman Logan PC (Jason Binford) as legal counsel. WTI is represented by Fox Rothschild LLP (Trey Monsour, Jeffrey Klugman) as legal counsel. Ramandeep Girn and Rebecca Girn are represented by Dentons US LLP (Clay Taylor, John Beck) as legal counsel. Yu Capital is represented by Nixon Peabody LLP (Christopher Fong) as legal counsel. Cosmic Education Americas Limited is represented by White & Case LLP (Samuel Kava, Gabriela Delgado) as legal counsel.

*International entities are not a part of these cases and are non-debtors.

**For many of these lease amendments, rent deferrals are in place until September ‘25.

***There are some wonky mechanics here where Five Y could exercise a subscription option to take some equity away from 2HR but they’re affiliates anyway so whatevs. This won’t affect the treatment of others as there’s a gifting mechanism from WTI to CN Noteholders and general unsecured creditors pursuant to some formula we’re too lazy to look at, so long as both of those classes, Classes 3 and 6, respectively, vote to accept the plan.

For its part, GGE is receiving certain of the debtors’ EB-5 entities. These EB-5 entities are the result of $50mm in equity funding received from EB-5 investors since ‘17. The idea is that these EB-5 entities might retain value for the investors who might still have a vested interest in these entities to get their green cards.

---

📚Resources📚

Photo by Etienne Girardet on Unsplash

Because we’re on the topic of education, we figured we’d point out that PETITION has a list of a$$-kicking resources on the topics of restructuring, tech, finance, investing, and disruption. 💥You can find it here💥.*

We’ve recently made a few additions.

For those of you who are singularly focused on distressed investing and restructuring, The Sarachek Law Firm’s Joseph Sarachek recently released “The Distressed Investing Playboook: How the Smart Money Profits When Companies Fail and Markets Go Haywire.”

You’ll recall that last year, Silverpoint Capital’s Michael Gatto published a book titled, “The Credit Investor's Handbook: Leveraged Loans, High Yield Bonds, and Distressed Debt.”

With the addition of several new titles, it’s great to see restructuring and distressed investing get a glow-up after two decades of dependence mostly upon Stephen Moyer’s “Distressed Debt Analysis: Strategies for Speculative Investors.” 👍

*****

For those of you generally more macro-oriented, these new titles caught our eye:

📍“King Dollar: The Past and Future of the World’s Dominant Currency” by Paul Blustein.

📍”Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, and the Road Ahead” by Kenneth Rogoff.

📍”How Countries Go Broke: The Big Cycle” by Ray Dalio.

*****

And, finally, for those of you in New York City, these new titles may be particularly relevant given recent events:

📍“Capitalism and Its Critics: A Battle of Ideas in the Modern World” — from John Cassidy.

📍”The World Under Capitalism: Observations on Economics, Politics, History, and Culture” by Branko Milanovic.

*Purchase at your own risk. Inclusion of books on this list does not necessarily mean that PETITION endorses the books or the contents therein. Don’t @ us if the book is a snorer or says some stupid-a$$ sh*t. Draw your own conclusions.

---

📤 Notice📤

David Blanks (Senior Director) joined Riveron from Alvarez & Marsal LLC.

Juliana Hoffman (Counsel) joined Akin Gump Strauss Hauer & Feld LLP from Sidley Austin LLP.

Leanna Haakons (National Director of Business Development) joined MACCO Group.

🍾Congratulations to…🍾

AlixPartners LLP (David MacGreevey) for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in the New Rite Aid LLC chapter 11 bankruptcy cases.

Alvarez & Marsal LLC (Mark Greenberg) for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in the Powin LLC chapter 11 bankruptcy cases.

Berkeley Research Group LLC (Mark Renzi) for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in the Sunnova Energy International Inc. chapter 11 bankruptcy cases.

JS Held on its acquisition of MorrisAnderson.

Pachulski Stang Ziehl & Jones LLP (Brad Sandler, Peter Keane, Robert Feinstein, Shirley Cho, Theodore Heckel) for securing the legal mandate on behalf of the official committee of unsecured creditors in the At Home Group Inc. chapter 11 bankruptcy cases.

Province LLC (Joshua Nahas) for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in the Flagship Resort Development Corp. chapter 11 bankruptcy cases.

Province LLC (Paul Navid) for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in the Boundless Broadband LLC chapter 11 bankruptcy cases.