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Private college files for Chapter 7 bankruptcy

A private school specializing in musical education has closed its doors permanently and filed for bankruptcy. Kentucky residents working in the music industry may recognize the McNally Smith College of Music, which has provided educational services for over 30 years. The school's administration filed for Chapter 7 bankruptcy in January. 

The college initially closed unexpectedly in December 2017 following communication from the school indicating serious financial burden. As part of the Chapter 7 filing, an accounting was made of the college's assets and liabilities. The school lists between 200 and 999 creditors, who are owed a total of between $1 million and $10 million. Assets were reported to range between $10 million and $50 million. 

Staff and students of the college are both listed among creditors, but the school has remained dedicated to supporting both groups. In an email, the state commissioner for higher education indicated they would work with the school in order to facilitate transfers for students and to maintain consistent school records. They also stated they would help to ease financial hardship on students and staff alike. 

Chapter 7 bankruptcy can be a sound business decision for many companies facing serious debt issues, as some Kentucky residents are already aware. While students and staff will be affected by the closure of the school, the ability to pay off creditors and settle debt will leave the college's ownership more able to make good on their promises. In the future, they hope to partner with other universities to continue to provide excellence in musical education, even following their bankruptcy filing. 

Source: tcbmag.com, "McNally Smith College of Music Files for Chapter 7 Bankruptcy", Amanda Ostuni, Feb. 8, 2018

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