A bankruptcy judge has approved Corinthian Colleges Inc.’s plan to liquidate its assets, largely concluding the defunct for-profit education company’s chapter 11 bankruptcy case, the Wall Street Journal reported today. The liquidating plan sets aside more than $4 million to benefit former students in their efforts to pursue discharges of student loans incurred at Corinthian schools, including Everest, WyoTech and Heald colleges. Corinthian Colleges wound down under a chapter 11 process, giving the parties the flexibility to negotiate a fund for students that wouldn’t have been available in a chapter 7 liquidation. Under the latter circumstance, lenders in the case owed $107 million would have wound up with all of Corinthian’s remaining assets. Instead, the lenders agreed to the cash pool for students in exchange for liability releases. Scott Gautier, who represented the committee of former students, said that the student trust fund gives former students the resources to find out to what extent they’ve been harmed and pursue discharges of billions of dollars of student loans. Bankruptcy Judge Kevin Carey declined to include language requested by the California state attorney general in the plan. However, the majority of the objections to the plan were resolved consensually, and the bankruptcy estate, rather than the Corinthian entity, is released from liability in the plan.
