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Thursday, Mar 28, 2024

New Owners to Close Down Learning Tree University

New Owners to Close Down Learning Tree University By SHELLY GARCIA Senior Reporter School’s out for Learning Tree University. The 30-year-old school for continuing education will close its doors in June, a little more than a year after it was acquired by its current owners. As many as 46 employees of Learning Tree, which operates campuses in Chatsworth as well as Costa Mesa, may be affected by the closure, according to Dennis Beal, executive vice president and CFO of Corinthian Colleges Inc., which acquired Learning Tree in January 2003. “When we looked at the traditional classroom setting, we thought there might be an opportunity to develop those, but it didn’t work out,” Beal said. Corinthian, a publicly held company with 69 colleges in 21 states including Bryman College, which has a San Fernando Valley campus, specializes in career training in healthcare, business, criminal justice, offering masters, bachelors and associate degrees both through its bricks and mortar campuses and its online programs. When the company acquired Learning Tree it had its eye on LTU’s online curriculum and continuing education programs for healthcare professionals, a series of coursework that enrolls about 10,000 nurses annually, according to the Learning Tree website. (Beal declined to discuss enrollment at the company’s individual units.) But LTU also operates some 45 certificate programs as well as individual continuing education courses in areas ranging from arts and entertainment to information technology, and the school appeared to be struggling to build those components. Although financial data on LTU is not available, the acquisition deal called for Corinthian to pay the seller, GSG Enterprises, $5.3 million in cash with $2 million of that sum deferred pending the ability of the school to achieve certain performance targets. Beal would not discuss the details of the transaction, but he said that the company paid $3.3 million for the LTU assets it acquired. Efforts failed Beal said that Corinthian tried over the past year to build LTU’s non-healthcare components, boosting marketing and other efforts, but the company was not successful. “For a year we tried to develop an intersection between LTU short duration courses and our core competencies of degree-granting,” said Beal, “and when we clearly decided there was not an intersection, we elected to exit that business and retain the two businesses where we believe there is an intersection.” Corinthian also attempted to sell LTU prior to its decision, entering negotiations with two potential buyers. “We actually tried to sell LTU in February and March of this year,” said Beal, “and that transaction was not completed. So at that time we elected to close the two campuses.” With the closure of LTU following the end of its current semester, Corinthian plans to integrate the continuing education courses in healthcare and the online curricula into its other business units. Beal said that the company was still formulating plans for employees, some of whom may be offered positions at other Corinthian units. “The plan right now is for nursing and continuing education to be integrated into our CSI division and online learning will be absorbed into our RCI division. CSI, Corinthian Schools Inc., focuses on offering associates degrees in very specific skill areas. RCI, Rhodes Colleges Inc., offers degree granting programs up to the master’s level. The closure of the schools however, will likely not be the last that’s heard of Learning Tree. Bankruptcy filing Just days before the Corinthian announcement, GSG filed for bankruptcy protection in United States Bankruptcy Court’s Central California District, claiming assets of $2.5 million and debts of $2.5 million. Among the personal property comprising nearly all the company’s assets listed in the Chap. 7 filing, was $2.5 million the documents say is due GSG as “earn out consideration and other fees due and payable by Corinthean (sic) Colleges Inc., pursuant to asset purchase agreement dated as of 12/17/02.” Among the company’s debts is $139,000 in judgments stemming from law suits brought against the company from firms ranging from publisher Prentice Hall Inc.($38,193) to several real estate firms. B. Michael Gould, president, chairman and one of the founders of Learning Tree, said the timing of the Chap. 7 filing was coincidental. Gould declined to comment on the school’s financial health prior to the sale, noting that 2000 was “a record year for the company in terms of revenues and enrollments,” although he added that the school was affected by the events of Sept. 11, 2001. He said he decided to sell LTU because it would require considerable capital and risk to expand it further. “It’s quite sad to see it closed at this point,” said Gould. “It was a venerable institution.” Although Corinthian claims to have bought only certain assets of LTU and not its debts, some of those debts could be re-examined by the trustee appointed for GSG, according to at least some of the creditors named in the Chap. 7 filing. For instance, Newbury Partners, Ltd., the landlord for LTU’s Chatsworth campus, is owed $20,898 in back rent and damages resulting from GSG’s occupancy. “I think it is the position of the debtor that Corinthian bought the assets without the debts,” said Russell Nadel, the Westlake Village attorney representing Newbury Partners. “We disagree. I believe the trustee will go after Corinthian.” The court, which has scheduled a hearing on the petition on April 29 in Woodland Hills, has assigned David Seror at Rein, Evans & Sestanovich LLP, Century City, as trustee for the case. Santa Ana-based Corinthian, founded in 1995, has had a considerable track record of revenue and earnings growth. In its most recent fiscal year, the company’s earnings soared 70 percent to $65.9 million or $1.43 per share and revenues increased more than 50 percent to $517.3 million.

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