Brandon Hall School filed a petition for Chapter 11 bankruptcy with the U.S. Bankruptcy Court for the Northern District of Georgia on Sept. 28, according to court records.
Ian Falcone of The Falcone Law Firm told Rough Draft Atlanta that Brandon Hall School filed its Chapter 11 in an attempt to sell its assets and pay its creditors in full.
“A motion has been filed seeking approval of the sale of the property. If approved, the purchase price should be sufficient to pay Brandon Hall Schools’ creditors,” Falcone said in his email response to questions on Oct. 2.
The Sandy Springs school notified parents on May 22 by email that it would not hold classes during the 2023-24 term as it lacked the finances to operate.
Total liabilities listed in the petition were more than $7.2 million. Of that total, just under $5.5 million was secured by the school’s property. The real estate was valued at $7.6 million.
Brandon Hall’s largest debt is a $4.68 million mortgage it has with Atlanta International School. The petition describes a purchase agreement with the other school.
It also lists a $507,386 Small Business Administration (SBA) loan. And it lists owing almost $360,000 in wages.
U.S. Bankruptcy Code Chapter 11 provides for reorganization, usually involving a corporation or partnership, according to the Bankruptcy Basics Glossary | United States Courts. Chapter 11 debtors usually propose a reorganization plan to keep the business alive and pay creditors over time.
Bankruptcy expert Adam D. Stein-Sapir of Pioneer Funding Group said the school had the option of filing for Chapter Seven, which is a straight liquidation, but didn’t do that.
“So something indicates to me that they have some kind of plan to either monetize the real estate or perhaps transfer into… or converting to some kind of new school,” he said.
He said he noticed the large mortgage loan from Atlanta International Schools.
“It’s interesting to me that they weren’t able to negotiate something with the lender, or more consensual than this kind of bankruptcy filing on what is typically the eve of a foreclosure sale of the property.,” Stein-Sapir said.
The petition lists a $30,000 payment to The Falcone Law Firm on May 20, with the “payment made in anticipation of Chapter 11 case to avoid foreclose – case prepared but not filed.”
Brandon School was founded in 1959 by Theodore and Shirley Hecht, according to its website. Located on a 24-acre campus on the Chattahoochee River, it was the former summer estate of Atlantan Morris Brandon and his wife, Harriet Inman, and includes the original 1920s residence. The school enrolled international and U.S. students.