Charter Schools Financier Blames Bankruptcy on Spat With Backer
(Bloomberg) -- A major financier of US charter schools filed bankruptcy, blaming pandemic-era subsidies that reduced demand for its services and a dispute with a top stockholder, New York investment firm Orthogon Partners Investment Management.
Charter School Capital has provided funding to about one in eight of the 8,000 charter schools in the US, the company said in court papers filed Monday. The company said its struggles go back to 2022 because public schools, including charter schools, accessed federal cash in response to the Covid-19 pandemic.
Before the pandemic, CSC did $300 million a year in business through its Money To Run Your School program. In 2024, that number had dropped to $32.6 million, according to court documents.
'Schools generally remain in relatively strong financial condition with limited need for additional funding,' Stuart Ellis, CSC's chief executive officer said in a court filing.
CSC said rising interest rates and property values also hurt the company's real estate business, which involved arranging sale and lease-back deals with charter schools.
The company said a dispute with Orthogon pushed CSC into bankruptcy after the investment firm won a $3 million arbitration award earlier this month related to a 2024 land sale and refinancing deal. CSC says there were errors with their financial reports, which started the dispute.
The company's other top debts include an $8.5 million, real estate loan guarantee and $700,000 in unpaid vendor and lease claims. The company had just $1.3 million in cash when it filed its case on Sunday.
The bankruptcy is Charter School Capital, Inc. 25-11016, US Bankruptcy Court, District of Delaware.
More stories like this are available on bloomberg.com
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