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Carlbrook School files for Chapter 11 bankruptcy protection

SoVaNow.com / February 18, 2016
No longer in operation and millions of dollars in debt, The Carlbrook School filed for Chapter 11 bankruptcy protection on Wednesday in U.S. Bankruptcy Court for the Western District of Virginia.

Carlbrook’s bankruptcy petition — divided between two entities, Carlbrook School, LLC and Carlbrook Properties, LLC — offers a glimpse of the financial woes that brought down the school, which closed in December after opening in 2002 at the stately campus site near Vernon Hill.

The owners are asking the Lynchburg-based bankruptcy court to approve an absolute auction of some 191 acres of land and buildings that include the historic Carlbrook “Rock House,” dormitories, classrooms and other structures that were erected to accommodate the student body at the year-round private boarding school.

At one time, as many as 130 students attended Carlbrook, which offered families able to pay the five-figure tuition an intensive program of academic instruction and therapeutic counseling for high school-aged students, many who had experienced trouble in other school environments. But beginning with the 2008 recession, Carlbrook saw its enrollment shrink until there were only around 40 students left on campus when the school closed.

The Chapter 11 petition filed by Carlbrook Properties, LLC provides the order of secured creditors that will be paid first from the proceeds of an auction. Topping the list is Halifax County, which has a $25,931.14 property tax claim against Carlbrook; another secured creditor is BB&T bank, which holds a deed of trust on the campus property and is owed $3.6 million on its loan.

A second filing by Carlbrook School, LLC lists scores of unsecured creditors that have also made claims for payment — after secured creditors are satisfied.

The largest of the unsecured creditors is Sodexho, Inc., a food services company that is owed $291,105.32. The next largest is Mastercard Business Card Services, owed $77,364.93.

A summary of the 20 largest unsecured claims against Carlbrook shows that the debt owed to those parties alone is just shy of $900,000. The filing lists many other creditors that owed unspecified sums.

The bankruptcy petitions, signed by Carlbrook founder Justin Merritt, estimate that the value of the school’s remaining assets is between $100,001 and $500,000, and the size of its estimated liabilities is between $1,000,001 and $10 million.

In addition to filing for Chapter 11 protection, Carlbrook has asked the court to approve Woltz & Associates to market the property and conduct an auction there. No date is given for a possible auction. Carlbrook is being represented in the proceedings by the Roanoke law firm of Magee Goldstein Lasky & Sayers, P.C.








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