During the hearing US Bankruptcy Administrator raised two concerns with the court about students and employees.
Alfred Street Baptist Church in Virginia offered to cover outstanding balances for 11 seniors at Saint Augustine's University.
The university will pursue an arbitration process to ensure students can graduate in May.
The move comes after concerns raised by the Attorney General's Office.
The letter outlines specific reasons why the Office of the Attorney General could not approve a multi-million dollar funding deal from Florida-based 50-Plus-1 Sports.
Since the university is appealing the decision, it will remain accredited until the appeals committee makes its final decision.