The private, nonprofit school that serves toddlers to sixth-graders has filed for Chapter 11 bankruptcy protection, with debts of nearly $1.8 million and assets of just $6,000, only half of that in cash, with the rest in hard assets. The bankruptcy filing also says Carden West owes more than $2,600 in federal taxes and says the school has no money in its payroll checking account.
A Carden West parent who declined to be named said the school is working to get itself out of its financial problems. He said the school is committed to remaining open until June and could stay open "if we band together and we fight off the attrition."
"We, like the rest of society, have to answer a simple question: Do we still have the capacity to believe in and fight for something bigger than our immediate needs?" he said.
The parent said the school amassed its $1.77 million debt over a long period of time.
"Part of it was tenant improvements on the building. There have been times when it has run at a deficit in the past and the bank has loaned money," he said, adding, "We collect tuition monthly and the teachers have all been paid in full."
Chapter 11 bankruptcies involve the financial reorganization of a business and provide protection to a debtor -- in this case, the school.
The process of Chapter 11 begins with the creation of a repayment and reorganization plan, which could also allow Carden West to cancel contracts. Creditors may propose their own repayment plan if unhappy with the reorganization/repayment plan offered by the debtor.
The school lists its only assets, other than cash at hand, as a collection of desks, tables, chairs, computers, musical instruments and choral risers.
The filing was made Nov. 3, and a hearing date for the repayment plan has been set for Feb. 28. Nineteen creditors are named in court documents.
The school has been operating out of and paying for a space that could hold as many as 400 students. That will have to change if Carden West is to stay open, the parent said. The school is close to ironing out a repayment plan to its landlord, he added.
"It (rent) is currently being paid and the next four months are being negotiated," the parent said.
Carden West's student population as of the bankruptcy filing was 211, which was down 11% from the 2010-11 school year.
The parent said the school has lost 5% to 10% of its students since the bankruptcy was announced, with a potential of 20% before the end of the year. He said parents must give 60 days' notice if they want to pull out a student.
Tuition, he said, will not go up before the end of the year.
"What we did was a campaign based on donations," he explained. "The school is running at a monthly deficit, which means you either have to cut expenses, which we're looking at, or raise income."
A visitor to the school recently claimed that the heat had been turned off and classrooms were being heated by space heaters. That, the parent said, is not exactly the case.
"The HVAC (Heating, Ventilation and Air Conditioning) system is finicky and in need of overhaul and has had to be repaired multiple times over the last year," he said.
The parent is urging other Carden West parents to keep their kids at the school.
"Right now, we can make it easily until June if we don't have attrition," he said.