Financially troubled Alderson Broaddus University, which had already voted to close under pressure, has now officially declared bankruptcy.
The filing was made in U.S. Bankruptcy Court for the Northern District of West Virginia.
The affairs of will the private university in Philippi now will be handled by the trustee who will be appointed by the bankruptcy court to oversee the collection and liquidation of assets and the payment of appropriate claims made by creditors, according to a news release distributed by Alderson Broaddus.
The bankruptcy filing suggests Alderson Broaddus has between 100 and 200 creditors, somewhere between $1 million and $10 million in assets and between $10 million and $50 million in liabilities.
The university’s board of trustees released a statement today notifying members of the campus community of their decision.
“The AB Board is grateful to the students, employees, alumni and donors who have embodied the Christian spirit of the University, and through them, the legacy of AB will live on,” said AB Board Chair James Garvin.
Alderson Broaddus is a private Baptist college that has roots in Phillipi, Barbour County, starting in 1909. Two other Baptist institutions combined in 1932 to form Alderson Broaddus College, and the institution was named a university in 2013.
About 750 students have enrolled there in recent years.
In the last month, Alderson Broaddus says it has arranged for all students who were enrolled for the fall semester to continue their education at other institutions of higher education. Student academic and financial records have been transferred to West Virginia Wesleyan College which will make transcripts and other information available to former AB students.
All employees have been encouraged to seek unemployment insurance benefits.
Alderson Broaddus had its authorization pulled one month ago during an emergency meeting of the Higher Education Policy Commission, which meant the institution was not permitted to enroll new students beginning this fall semester.
Higher education officials had worried that the university was in such a financial bind that it could collapse partway through the semester or before the conclusion of the academic year.
At that point, the school could not collect tuition payments for the fall semester, removing any last ability to pull in funding.
Alderson Broaddus had also anticipated an Employee Retention Credit payment from the Internal Revenue Service of more than $1 million, but university officials said those funds were not received in time to permit ongoing operation.
The university’s financial issues are longstanding and deep.
Consolidated financial statements from 2020 and 2021 showed the college’s greatest debt is $27.7 million in community facilities loans with the U.S. Department of Agriculture, which has been a lifeline for struggling rural colleges. The loans had a 40-year term at a $3.875 interest rate.
In 2020, USDA also provided a $1.4 million Community Facilities Direct Loan with a 30-year term at 2.25% interest rate.
Such USDA loans are typically a last resort for colleges that must demonstrate that other financial options aren’t available.
“As a lender, USDA Rural Development is working with the University through this process, and we’re committed to doing everything in our power to achieve the best outcome,” stated a USDA Rural Development spokesperson last month when asked about the debt.
“The Biden-Harris Administration recognizes rural colleges and universities are critical to the regional economies, local communities, and the students they serve.”
Besides that big debt, the university owed $2 million to Sodexo, its food supplier. And the university has other debt lines of credit up to $5 million.
Alderson Broaddus was also hit this summer with a termination notice over $776,598.70 in unpaid water, sewer and electric bills. The City of Philippi filed a motion with the Public Service Commission for Alderson Broaddus to show cause why the utilities should not be shut off.
This week, Alderson Broaddus responded to the show cause filing by stating the university’s necessity of filing bankruptcy. University officials said the bankruptcy trustees should have say in the utility termination.
Alderson Broaddus asked that the utilities remain on for the time being for a couple of additional reasons. One is that a day care center operates on campus, and children and staff will still need the utilities for the time being. Another is that science laboratories contain chemicals that need to be kept cool.