St. Augustine’s, Raleigh HBCU, files for bankruptcy & loses accreditation fight
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- St. Augustine’s University filed for bankruptcy in the Eastern District of North Carolina.
- The university abandoned its fight to retain accreditation and will focus on teach-outs.
- St. Augustine’s lists $50–$100 million in creditor claims and assets of $100–$500 million.
St. Augustine’s University filed for bankruptcy Monday in the Eastern District of North Carolina. The university then announced Tuesday it is abandoning its efforts to remain accredited, and that its interim president would step down.
After a years-long struggle to maintain accreditation, the school has decided that its legal fight with its accreditor is no longer “a prudent use of resources.”
In the shadow of this incoming loss of accreditation, students will need to finish their studies at another university, the school said. St. Augustine’s will now focus on teach-out agreements for currently enrolled students, and work on developing nondegree certificates and apprenticeships.
In teach-out agreements, schools arrange for students to transfer out of a closed school or program and finish their studies elsewhere.
The historically Black university in Raleigh owes between $50 million and $100 million to hundreds of different creditors, according to its bankruptcy filing. The school’s assets, on the other hand, hover somewhere between $100 million and $500 million.
The bankruptcy filing reveals that St. Augustine’s biggest single debt is to the IRS — the school owes $14.4 million. It also owes upwards of $3 million to American Trust Company, a Kentucky-based financial services firm, and nearly $2 million to Ellucian Company, a vendor of student information systems.
The school owes a significant amount to other federal agencies, with more than $7 million of debt between the Department of Commerce, the Department of the Interior, and the Department of Education.
St. Augustine’s has marked each of its top 20 highest debt amounts as “disputed,” which means the university may try to argue about how much it owes. The creditors will have to submit proof that the university does indeed owe them the listed amount, with a deadline of Aug. 25.
The university has also fallen behind on basic operating bills, not just big-ticket debt. It owes money to its elevator operator, its janitorial service, its food service provider, its security services provider, and many individuals. It can’t pay its City of Raleigh public utility bills or its Duke Energy bills.
The university says that the bankruptcy will help it “protect key assets, including real estate and land.”
The Raleigh law firm Waldrep Wall Babcock & Bailey will serve as St. Augustine’s bankruptcy counsel. The school has paid the law firm an $100,000 retainer. One attorney on the case, Kevin Sink, charges an hourly rate of $575.
WRAL first reported the news of the bankruptcy.
The school says it will “continue to operate throughout the process, and a plan of reorganization is being developed to be submitted to the Court outlining SAU’s path forward. SAU enters this process with the support of its primary lending partner, Self-Help Ventures Fund, demonstrating confidence in the University’s future.”
Self-Help, which took over parts of the university’s debt earlier this year in a deal that included the ousting of key members of St. Aug’s leadership, will appear in court. Chief Judge David Warren will preside over the bankruptcy case. A creditors’ meeting is set for May 27.
Verjanis Peoples, the school’s current interim provost, will step into the role of interim president of St. Augustine’s, following Tuesday’s announcement that former interim president Jennie Ward-Robinson stepped down.
The school says that despite the bankruptcy and expected loss of accreditation, it is still focused on finding a workable path forward. The school indicated that it could someday pursue reaccreditation.
“SAU will work collaboratively with stakeholders, including creditors, donors, alumni, and community partners, to provide meaningful opportunities for supporters of the institution to contribute and play an active role in its continued progress and success,” the school’s statement reads.
“These steps position the University to move forward with clarity and purpose, continuing its mission of preparing students academically, socially, and spiritually for leadership in a complex, diverse, and rapidly changing world. Founded in 1867, SAU remains deeply committed to its historic mission and to building a sustainable future.”
Student work and degrees from this semester are valid, as the accreditation won’t expire until May 15.
