A well-known college of music has closed its doors after filing for bankruptcy in federal court. Connecticut musicians may be familiar with the McNally Smith College of Music, a private college in a neighboring state. The company intends to use the Chapter 7 filing to liquidate its assets to pay down existing debt, a tactic commonly used by struggling businesses.
The declaration comes after the school’s closure back in December, with administrators citing financial pressure as the primary motivator for this decision. Since then, the school has filed for Chapter 7, and an accounting of its assets and debts has been submitted to the court. The filing lists assets falling between $10 million and $50 million, with liabilities between $1 million and $10 million.
The school lists between 200 and 999 creditors, many of which will benefit from the filing. Liquidated assets will be used to pay back as much debt as possible; given the disparity between the assets and liabilities listed in the filing, the basis for the Chapter 7 proceeding appear well-grounded. The school has promised to work with students and staff to secure records and assist with transfers to other colleges.
In many cases, as some Connecticut residents are aware, a Chapter 7 filing can help pull a company out of debt, even if it means liquidating all of the company’s assets. This can help business owners achieve a more stable financial footing in preparation for their next endeavor. In the case of the McNally Smith College, owners of the private school hope to move forward by collaborating in musical education with larger universities, a move made possible by the Chapter 7 filing.
Source: tcbmag.com, “McNally Smith College Of Music Files For Chapter 7 Bankruptcy“, Amanda Ostuni, Feb. 8, 2018