College of New Rochelle files for bankruptcy, campus to be sold at auction – The Journal News / Lohud.com

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Mercy College flags heralding "A New Path" have replaced College of New Rochelle flags on CNR's former campus in New Rochelle, Sept. 2, 2019.(Photo: Mark Lungariello/The Journal News)

The College of New Rochelle has filed for bankruptcy and will sell its 15.6-acre former main campus in an auction within two months.

The Chapter 11 bankruptcy filing Friday comes a month after the college ceased academics and held the final graduation in its 115-year history.

A deadline for qualifying bids to take part in the auction will be due some time in early November, with specifics yet to be announced. The campus is being leased through 2020 by Mercy College, which reportedly accepted the transfer of more than 1,700 former College of New Rochelle students.

The bankruptcy is the final chapter of this storied college, Mark Podgainy, the schools interim chief restructuring officer said in a statement.

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Over the course of the last 115 years, CNR has provided more than 87,000 students women and men, both traditional age and adult learners with the opportunity to better their lives through education, he said.

The college decided to dissolve after a long-standing financial crisis that led to the conviction of a high-ranking finance official on federal charges. The area is zoned for educational or single-family residential; other uses would need to be approved through a zoning change by the New Rochelle City Council.

A&G Realty Partners and B6 Real Estate Advisors are marketing the campus for either continued use as an educational facility or redevelopment for other uses including residential. The campus has 20 buildings, with more than 425,000 square feet of space.

There has been tremendous interest in the campus since the announcement CNR was closing, Emilio Amendola, co-founder and co-president of A&G, said in a statement. A turnkey campus such as this, located 15 miles from Manhattan, is a once-in-a-generation opportunity for an educational user. The orderly bankruptcy sale will maximize recovery for all parties involved.

Final bidding procedures and deadlines will be announced once approved by the bankruptcy court, the companies announced.

The college was already facing declining enrollment and difficulty keeping its head above water in October 2016, when it announced the resignation of then-President Judith Huntington alongside the launching of an internal financial probe.

The probe uncovered $31 million in previously unknown debts, including millions in mounting payroll taxes, that had been hidden from the college's financial books and its board of trustees.

Despite recovery efforts that included the sale of some properties and a fundraising initiative, it became clear that digging out of that hole was becoming more and more unlikely.

The college announced earlier this year it would close, with administrators shifting the focus on securing a "teach-out" agreement to offer a path for its 2,700 students to complete their educations elsewhere.

Former Controller Keith Borge, who retired before the announcement of the financial crisis, pleaded guilty in March to charges of securities fraud and failure to pay payroll taxes. He was sentenced on Aug. 28 to three years in federal prison and must pay a $25,000 fine.

In its bankruptcy court filings, the college still listed $17.9 million in tax debts to the IRS and New York State, as well as $100,000 to the city of New Rochelle. It also owes $30 million to the Dormitory Authority of the State of New York and $13 million to the New Rochelle Industrial Development Agency, which issued bonds for construction projects on campus.

The college listed outstanding loans to Key Bank and The Carney Family Charitable Foundation of $2.4 million and $2 million, respectively. In total, there were $72 million in assets listed as of Aug. 28 but liabilities exceeding $82 million.

The bankruptcy filing listed between 1,000 and 5,000 possible creditors. Some of the largest included landlords for spaces in New York City, totaling more than $900,000 to four different companies. Some $3 million was listed as owed to the Industry and Local 338 Pension and Welfare.

The college has as many as 32 people still on staff during the wind-down process, the filing showed. The interim restructuring officer asked the court to allow for authorization for some spending, including $150,000 to Marist College, which operates the closing schools computer system.

Follow Mark Lungariello on Facebook: @lungariello; and Twitter: @marklungariello.

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College of New Rochelle files for bankruptcy, campus to be sold at auction - The Journal News / Lohud.com