Summary of Receivership Request, stated by Randall Barton under oath: https://www.republicreport.org/wp-content/uploads/2019/01/DC-Dk7-Resp.pdf
DCEH revenue flow is almost exclusively from tuition and fees paid by its students - a significant majority of whom utilize grants and loans from the HEA of 1965.
Within 60 days of the October 2017 closing, after completing the opening balance sheet audits DCEH discovered that the actual revenues fell far short of the projections provided by EDMC in the amount of ‘tens of millions of dollars’.
The enrollment decline and revenue was due to:
1) Vastly reduced marketing efforts by EDMC.
2) A gap between curricula and employable skills for a number of programs.
3) Lack of capital investment in facilities and technology.
The operating loss was 38 million in 2018, 64 million in 2019 and would be 69 million in 2020.
The largest expense was employee compensation, followed by rent.
Closing the 30 schools would eliminate the 64 million dollar operating loss of 2019 and avoid having to spend 8.7 million for capital expenditure (aka to upgrade the campuses).
SUO was limited by the DOE in being able to pay its rent which means they are at risk of cancelling the teachout effectively.
Eastern Gateway Community College (EGCC) is wanting to purchase Argosy and SUC.
1) They will only purchase the schools if they are free and clear of creditor liens, claims, and interests.
2) EGCC may use Argosy or SUO’s structure to open a campus to focus on auto workers expected to be displaced following GM’s closure of the Lordstown, Ohio plant.
DCEH owes its creditors 41 million dollars, has rent of 10,950,777 to pay, received 15 default notices and 9 eviction actions.
DCEH’s plans initially were:
1) Promoting student affordability by changing and lowering the education cost structure
2) Minimizing its footprint and focus more on the remaining campuses
3) Reducing corporate overhead and non-student support services
4) Pushing new product development to the forefront, including high potential, low employment skills based Nano courses.
Negotiated with Studio Enterprise Manager, LLC an affiliate of Colbeck Capital LLC to enter an agreement with 9 Art Institutes.
DOE, secured creditors and DCEH agreed to transfer Ai and South to a ‘independent nonprofit foundation not affiliated with DCEH’.
Delay in funding and Title IV funds have only compounded the financial crisis.
DCEH’s plan is to ‘wind-up its operations’, and restructuring of debts to facilitate selling Argosy to EGCC through receivership.
The only thing that stands out especially is that Colbeck Foundation which is now the EPF is clearly owned by Colbeck Capital/Studio.