A judge says Saint Augustine’s University’s bankruptcy case has had too many "surprises."
During Wednesday's bankruptcy hearing, Judge David Warren said he was “surprised by the lack of professionalism” exhibited by the school’s previous board.
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His reaction came up as part of a discussion related to a pending lawsuit against St. Aug’s and former board members Brian Boulware and James Perry.
Former president Christine McPhail filed a lawsuit, claiming that Boulware and Perry fostered an environment of discrimination against women.
Under university bylaws, the school is required to cover legal expenses for board members, according to the school's attorney Ciara Rogers.
The school argues that it would have to spend more money participating in that litigation.
Judge Warren agreed, putting a pause on that for now in order to protect the school’s limited resources at this time.
“It’s too much of a risk for the university,” he said.
The troubled HBCU filed for Chapter 11 bankruptcy in April. During its last hearing, university leaders said the school would not offer classes this fall.
Judge Warren said directors and officers (D&O) liability insurance could have mitigated some of these costs, but Rogers says the school didn’t have any at the time.
The insurance is used to protect company managers from claims that may arise from decisions and actions taken as part of their duties, according to insurance company Allianz Commercial.
“I’m just astonished people in fiduciary capacity for a university did not have a D&O policy,” Judge Warren said. “What else is out there that I don’t know about, or the public doesn’t know about?”
Rogers emphasized that the school has new leadership, including a new makeup of the board.
Bankruptcy administrator Brian Behr said the new board will need to step up to get the school over the finish line.
St. Aug’s land
According to court documents, the school wants to hire a real estate advisor to help make plans for redeveloping or selling its land.
The university would pay Avison Young-North Carolina a $50,000 retainer. The company would also receive commissions up to $7.5 million.
Court documents say the company has previously worked with major developers, including Kane Realty, the group behind North Hills.
The school's lender and the bankruptcy administrator expressed that they have concerns about the deal, but did not go into detail.
