Saint Augustine's has bankruptcy hearing 2 months after filing, no final order from judge

RALEIGH, N.C. (WTVD) -- Saint Augustine's University (SAU) had its bankruptcy hearing in federal court on Tuesday morning. The private HBCU school filed for Chapter 11 bankruptcy in April.

According to the filing documents obtained by ABC11, school leaders admitted that it owes between $50 million and $100 million to creditors. The school described the move as a "voluntary bankruptcy filing" and said it hopes to "strengthen its financial foundation" over the long term.

However, the judge did not enter a final order after the hearing.

US Bankruptcy Administrator Brian Behr raised two concerns with the court.

Behr said one concern is for employees and students, and "what they need to do to participate in the bankruptcy."

He also expressed worry over funding, and said the school is "treading water right now" and that he's "eager to see where we go from here - operations are not sufficient to cash flow."

Financial records show the university estimates it has between 200 and 999 creditors, with assets valued between $1 million and $500 million. The filings also indicate the school owes $14.4 million to the Internal Revenue Service.

Selling part of the school's 105-acre property in Raleigh to help cover its debt is one of the options they are looking at.

The university has also decided to discontinue litigation related to its accreditation status, marking a significant shift after more than two years of legal efforts to maintain that status.

When the university's accreditation expired on May 15, all students transferred.

Bankruptcy lawyer David Mills says Chapter 11 is specifically designed to allow organizations such as St. Aug's to reorganize their debt, shed themselves of unprofitable leases and contracts, and restructure.

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