[B]URLINGTON — After Monday’s announcement that Burlington College will close later this month, the chair of its board of trustees says he hopes the college can “gracefully” wind down operations.
That means helping students find new schools and faculty find new jobs, said Chairman Yves Bradley said in an interview Tuesday. School officials have said current and incoming students will be welcomed at other schools in the state, and the college and state Department of Labor will help the 30 faculty and staff who lost their jobs look for new placements.
It also means paying back creditors to the best of Burlington College’s ability, Bradley said.
Trustees and school officials were trying to find a way forward that would keep the college open but decided it was futile.
That leaves People’s United Bank, the school’s main creditor and the first mortgage holder on its remaining North Avenue campus, “in the driver’s seat” when it comes to what happens next, Bradley said.
In April, People’s United refused to renew a line of credit worth between $750,000 and $1 million, which the college needed to cover operating costs. Burlington College also still owed People’s $2.2 million on a $6.7 million loan from 2010 that the school used to finance its more than $10 million purchase of a 33-acre waterfront campus on North Avenue.
Michael Seaver, People’s United Bank Vermont president, declined to explain why the bank decided not to renew the crucial line of credit, saying he can’t comment on “confidential customer relationships.”
Bradley said the explanation he received from the bank was fairly simple: Burlington College was in the red for too long, and People’s finally decided it was too risky to keep lending it money.
“There comes a time when a lender says, ‘I can’t do this anymore. I can’t keep helping,’” Bradley said.
Bradley said trustees and school officials genuinely believed they were only six months from solvency. But he said he understands that to bank officials, especially those outside Vermont, Burlington College was just an item on a balance sheet that was perpetually in the red. People’s United Bank is headquartered in Connecticut.
People’s will take control of the remaining Burlington College campus, though it’s unclear precisely when. Bradley said a meeting was scheduled with school and bank officials Tuesday evening, which might offer more clarity. Bradley said the remaining property is worth $3.1 million, which is roughly what the college still owes the bank.
Burlington College President Carol Moore said an agreement exists among People’s, the school and developer Eric Farrell that Farrell will be able to purchase the remaining college property.
Farrell bought much of Burlington College’s property in two separate purchases for more than $9 million.
Bradley said school officials have not decided whether to declare bankruptcy, though he did not appear to think it’s likely. Bankruptcy is often declared to protect assets, and other than the North Avenue property and the furniture, fixtures and equipment that fill the building, the school does not have significant assets, he said.
The Vermont Economic Development Authority is in “second position” after People’s United among Burlington College’s creditors, Bradley said. The school owes VEDA $165,000, he said. Burlington College also owes money to its vendors, though Bradley did not know how much.
He could not say Tuesday what will happen to scholarship funds, or to student debt that is owed to the college.
A lawyer for the estate of G. Jason Conway, which is suing the college over how $70,000 in donated scholarship money was used, said a settlement reached with the college needed approval from People’s United Bank. The settlement would have resulted in repayment of the $70,000 to the Conway estate.
Norm Blais, attorney for the Conway estate, said he believes, based on the news that People’s would not renew its line of credit with Burlington College, that the bank also had not approved the settlement his client reached with the school.
At this point, Blais said, he believes the estate is just another of the college’s creditors, and he has asked the court for a “judicial attachment” that would enhance his client’s position as a creditor.