Radian Asset Assurance Inc. accelerated payment of $4.9 million of bonds owed by Lambuth University, according to a market notice filed Tuesday by Bank of New York Mellon, the trustee.
Lambuth, a private, nonprofit Methodist university, filed for Chapter 11 on June 30 in the U.S. Bankruptcy Court for the Western District of Tennessee. Meanwhile, the university closed its doors.
The court Nov. 8 authorized Lambuth to sell its assets to the city of Jackson and the Jackson Industrial Development Board “free and clear of all liens, claims, rights, encumbrances and other interests,” BNY Mellon’s notice said.
The court order also authorized a settlement in which the university agreed to pay $4.9 million to pay the claims of Radian and the trustee. Radian, which insured the bonds, then directed BNY to pay the outstanding principal on the bonds on Dec. 22, the notice said.
Lambuth used a conduit, the Jackson Health, Educational and Housing Facility Board, to issue $6.78 million of Series 1995A tax-exempt revenue bonds and $1.7 million of Series B taxable revenue bonds without underlying ratings. At the time of the bankruptcy settlement, $4.28 million of Series A bonds and $680,000 of B bonds were outstanding.