Earlier this month, Bacone College filed for Chapter 11 bankruptcy to allow time to get its finances in order.
Oklahoma's oldest higher ed institution has been in hot water for years. The school owes millions of dollars in debt to various creditors following mismanagement and inconsistent leadership. The financial issues spiraled after being sued by Utah-based company MHEC for unpaid HVAC work.
The hearing regarding the school’s initial filing was last week on July 22 where creditors reviewed the plan. Days before the hearing on July 17, MHEC petitioned for a dismissal.
After striking this motion, the company then asked the judge to change the type of bankruptcy Bacone is using. MHEC wants Bacone to switch from being in Chapter 11 bankruptcy to Chapter 7. The company cites a belief that Bacone is unable to pay or rehabilitate its decaying campus and will continue to accrue more expenses.
Chapter 11 bankruptcy allows debtors to “pause” their debts in order to reorganize their finances and formulate a plan. Chapter 7 is filed when debtors are unable to come back from their debt, and liquidate their assets to pay their creditors.
The chapters get their name from different sections in the federal bankruptcy code. If Bacone’s Chapter 11 filing is converted to Chapter 7, its assets — including the historic land — would be sold to settle its debts. If the motion is denied, Bacone would be allowed to proceed with its plan to repay.
Bacone recently lost its accreditation from the Higher Learning Commission, which accredits many colleges across the region, due to the lack of students or faculty members. That loss is mentioned as further evidence that the Chapter 11 filing should be converted to Chapter 7 in “good faith.”
Another hearing regarding the college’s fate is set for August 14.
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