MorrisAnderson Assisting Lenders Restructure Debt Avoiding Publicity


Annual Sales


in Debt

Private Catholic School, Location Midwest


Private Catholic School. 1,200 students. $9 million sales. $50 million debt.

  • Donations and returns on investments in endowments had fallen significantly below projections.
  • Alumni donor base primarily comprised of relatively small dollar contributors – very few “wealthy name” donors.
  • Incurred debt to build/refurbish facilities with plan for continued donations and investments in endowments.
  • The Great Recession resulted in a declining enrollment that underachieved projections for operating revenues and donations; the organization was slow to adjust its cost structure.
  • $50 million debt was multi-faceted: line of credit, bonds, swap agreement, and letter of credit.
  • Defaulted on swap obligation; senior lenders backing a letter of credit decided to not renew.
  • A forced change in management team divided alumni/donors into two factions.
  • Public awareness of the situation would have a long-lasting negative impact on enrollment.


  • Extensive cost cutting and long-term plan for replacement of teaching faculty.
  • Assessed five-year cash flow forecast for feasibility.
  • Divested idle assets, realigned capex spend to donor-based initiatives.
  • Provided assessment of the situation along with options and recommendations for attainable solutions.
  • Ensured the board was informed and major donors were actively engaged in exploration of scenarios.


  • An out-of-court resolution comprised of replacement financing plus a discrete capital campaign allowed the bank group an acceptable exit.
  • All of the core facilities and services continued uninterrupted during this process.
  • Avoided public awareness of the situation.
  • Enrollment not impacted by the events.