Cerberus Will Finance IIT Tech Post-Bankruptcy

by San Antonio Attorney

After ITT Educational Services Inc filed for bankruptcy, Cerberus Capital Management has lined up more than $6 million for financing.

Cerberus Capital Management serves as an existing lender for IIT Educational Services.  Deborah J. Caruso, a legal representative for bankruptcy trustees, said that financial resources are strictly required since the company cannot carry on its operations without monetary aid.  The loan will be reviewed by an Indianapolis judge in bankruptcy court by next week.

IIT Tech briefly halted operations last September, after the federal education authorities prohibited access to loans.  The abrupt closure of the school came as a surprise to 40,000 enrolled students and 8,000 employees.

The educational institution initially planned to file for Chapter 11 bankruptcy.  However, IIT Tech filed for a Chapter 7 bankruptcy instead and assigned all business decisions to an independent trustee.

The trustee was tasked with the assembly of company files such as the transcript of records and assets that require cash-outs.  Aside from the main task, the trustee was responsible for leftover battles with other governing bodies such as the Consumer Financial Protection Bureau, Commonwealth of Massachusetts and State of New Mexico.  All of these filed lawsuits against ITT Tech prior to its bankruptcy filing.

Cerberus Capital Management will regulate the bankruptcy loan through the sales of abandoned campuses worth $33 million by the end of March 2017.  The estimated income of ITT Tech’s real estate is between $70 million and $100 million.  The amount is more than enough to absolve ITT Tech from its debts and bankruptcy financing.

Cerberus Capital Management recently allowed the trustee to use ITT Tech’s cash in its coffers during the bankruptcy filing.  Since Cerberus is considered as a secured lender, they are allowed to use ITT Tech’s finances as collateral for loans.

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