PHOENIX – An operator of bond-financed California charter schools has filed for bankruptcy.
Tri-Valley Learning Corporation filed for Chapter 11 reorganization this week, the company announced in correspondence to the parents of students and other stakeholders.
Tri-Valley operates a charter high school and K-8 school in Livermore, in Alameda County 44 miles east of San Francisco, and a middle and elementary school in Stockton.
In a letter posted to the company's website, interim chief executive officer Lynn Lysko explained that she inherited a multi-million dollar deficit when she took the interim CEO job six months ago and that the school has already made drastic cutbacks including a 70% management staff reduction.
Bondholders are the ones that stand to take a hit in the reorganization, because the school has already settled up with nearly all other creditors including the state pension plan.
The company has about $42 million of outstanding bond debt issued in 2012 and 2015 through the California School Finance Authority, according to financial documents filed on the Municipal Securities Rulemaking Board's EMMA website, and it is that debt that the company hopes to reorganize.
"The vast majority of TVLC's debt relates to the 2012 bonds and a 2015 lease agreement for school site renovation that were incurred under previous management," Lysko wrote. "The present restructuring will allow TVLC to reorganize that debt in a responsible manner."
All of the schools will continue to operate during the process, Lysko continued, and the halt of debt collections allowed under the process should free up about $200,000 per month.
"TVLC will have at least a 120-day opportunity to propose a plan of debt reorganization," the letter said. "Conversations have already begun with major creditors. Following the initial 120-day time period, there is an additional 180-day opportunity for creditors to evaluate and vote on the plan after which time the federal court will give final say to a restructuring plan."
Lysko said that while the decision to enter the bankruptcy process was difficult, Tri-Valley believes that the process will ultimately benefit students and teachers.
"The single biggest remaining hurdle to fiscal stability is enrollment stability," wrote Lysko. "I value each and every student that attends our schools and I know that we have turned the financial corner and will be a presence in our communities for the foreseeable future."
