LOS ANGELES--(BUSINESS WIRE)--A committee representing the interests of former students of Corinthian Colleges, Inc., one of the nation’s largest for-profit college systems before its recent closure, has requested that the court handling Corinthian’s Chapter 11 bankruptcy place a hold on all efforts to collect on obligations that are currently considered “student loan” debt.
Hundreds of thousands of former students may be adversely affected by the collapse of Corinthian, which once operated 107 campuses before shutting its doors in April. The student committee seeks the imposition of a court-ordered freeze on efforts by any party to collect on obligations related to federal and private funding of Corinthian—funds that would have been advanced for tuition, fees, and other school-related expenses—while the responsibility for the repayment of those funds is determined in Corinthian’s bankruptcy.
“Corinthian and its affiliates received billions of dollars from government and private student loan programs, while it significantly misrepresented the value of its educational programs to students, the government, and accreditation agencies,” said Mark Rosenbaum, Director of Public Counsel Opportunity Under Law.
In May, the U.S. Trustee’s Office granted the request of an ad-hoc group to recognize a special committee representing the interests of students in the proceedings, the first known instance of a student group being given a seat at the table in the bankruptcy of an educational institution.
“Until the full extent of Corinthian’s misconduct is known, and until the court decides who holds responsibility for repaying billions of dollars of advances that were funded on Corinthian’s misrepresentations, all collection efforts should be put on hold,” said Scott Gautier of Robins Kaplan LLP. “This motion represents an effort to maintain the integrity of the Chapter 11 process by preserving the status quo between Corinthian, the government, student victims, and other creditors while they work together to resolve what might be a multi-billion dollar disaster.”
Public Counsel and Robins Kaplan LLP represent the student committee in the Delaware bankruptcy proceedings, with the assistance of Polsinelli LLP as local Delaware counsel. The students’ legal team argues that without the hold on student debt collection, an estimated tens of thousands of students, currently subject to harsh collection proceedings, would need to engage Corinthian in individual proceedings to establish Corinthian’s wrongdoing. Efforts to negotiate a consensual Chapter 11 plan for Corinthian, they say, would be hindered if not rendered impossible by the overwhelming litigation demands and with the rights of creditors in constant flux.
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Public Counsel is the nation’s largest pro bono law firm. Founded in 1970, Public Counsel strives to achieve three main goals: protect the legal rights of disadvantaged children; represent immigrants who have been the victims of torture, persecution, domestic violence, trafficking, and other crimes; and foster economic justice by providing individuals and institutions in underserved communities with access to quality legal representation. Through a pro bono model that leverages the talents and dedication of thousands of attorney and law student volunteers, along with an in-house staff of more than 75 attorneys and social workers, Public Counsel annually assists more than 30,000 families, children, immigrants veterans, and nonprofit organizations and addresses systemic poverty and civil rights issues through impact litigation and policy advocacy. For more information, visit www.publiccounsel.org.
About Robins Kaplan LLP
Robins Kaplan LLP is among the nation’s premier trial law firms, with more than 220 lawyers located in Atlanta, Bismarck, North Dakota, Boston, Los Angeles, Minneapolis, Mountain View, California, New York, Naples, Florida, and Sioux Falls, South Dakota. The firm litigates, mediates, and arbitrates high-stakes, complex disputes, repeatedly earning national recognition. Firm clients include—as both plaintiffs and defendants—numerous Fortune 500 corporations, emerging-markets companies, entrepreneurs, and individuals.
