Brooklyn Prep School Enters Chapter 11 Bankruptcy

Facing declining enrollment stemming it says from negative publicity about a 2008 foreclosure action, it says, a Brooklyn prep school filed for Chapter 11 bankruptcy Monday.

Adelphi Academy of Brooklyn said that it filed for bankruptcy because it’s been unable to operate profitably after the lowered enrollment that followed 2008 news reports of a foreclosure by its lender, Metropolitan National Bank, which holds a $6.2 million note, according to court documents.

In court documents, the school said that while it disputes the “technical default” that caused Metropolitan to take action against it, “the resulting negative publicity significantly impacted the Debtor’s reputation and resources and despite continued efforts, its student enrollment declined.”

Current enrollment is at 100 students, according to court documents.

Adelphi’s board of directors’ chairman, Michael Lu, said in an interview Tuesday that the filing is “purely procedural,” and a way for the school to reorganize while leaving operations unaffected.

More recently, the school was in the news again when it was sued in 2012 for millions by the family of a student, alleging one of the teachers assaulted him.

That case is ongoing with depositions coming up at the end of this month, said Baron Associates PC’s Bruce Baron, a lawyer for the family.

“It’s my hope that this bankruptcy filing doesn’t pull the carpet out from under my client’s feet, as having their day in court,” Mr. Baron said Tuesday.

A Chapter 11 filing usually halts other pending lawsuits, but it’s possible to petition the bankruptcy court for permission to continue these prior cases.

Adelphi’s Mr. Lu said the lawsuit is unrelated to the school’s decision to file for bankruptcy, calling it “pure nonsense” that’s being handled by the school’s insurance company.

The Chapter 11 case has been assigned to Judge Elizabeth Stong of the U.S. Bankruptcy Court in Brooklyn. Adelphi is asking Judge Stong to approve a $750,000 bankruptcy loan, which is traditionally used to allow a company to continue operations during its Chapter 11 case.

“The Debtor urgently requires working capital to continue its operations including, for expenses and costs for completing the school term and to maintain its planned summer school, camp and other programs and activities,” Adelphi said in court documents.

Adelphi Academy has operated in Brooklyn since 1863. In 1870 it began enrolling and providing college-preparatory education to girls, and with the help of the Pratt Institute, Adelphi opened the first kindergarten in Brooklyn in 1884. The school operates today in a five-story brick building in the Bay Ridge neighborhood. Tuition starts at $11,750 for pre-kindergarten and ticks up yearly to $20,250 by 12th grade, according to its website. Those rate increases for specialty programs, reaching $38,250 per year for the special needs program.

Adelphi said it has between $10 million and $50 million in assets and between $1 million and $10 million in liabilities, according to court documents.

Write to Stephanie Gleason at [email protected]. Follow her on Twitter at @StephGleason.