Old School Inc., a Delaware-based charter school financing company that once deployed over $3 billion in capital across nearly two decades, filed a liquidation plan in bankruptcy court that would leave preferred shareholders with virtually nothing while paying general creditors in full.
The combined disclosure statement and liquidation plan filed September 16 in the U.S. Bankruptcy Court for the District of Delaware projects that holders of $58 million in preferred equity interests will recover just 0% to 7% of their investment, while $3.7 million in general unsecured claims will be paid in full with interest.
The stark disparity in recoveries reflects the company's rapid decline following the COVID-19 pandemic, which eliminated much of the demand for charter school financing as government relief programs provided schools with unprecedented funding. The company's receivables financing business plummeted from a peak of approximately $300 million annually to just $32.6 million in 2024.
"Prior to the COVID-19 pandemic, the Money To Run Your School business line financed, at its peak, approximately $300 million in receivables per year," the company stated in court filings. "However, in connection with the COVID-19 related pandemic relief, governmental agencies provided substantial monetary relief to public educational institutions—including charter schools—the primary population served by Money To Run Your School had a substantial decrease in the need for ongoing receivables financing."
Three-Pronged Business Model Crumbles
Founded in 2006, Old School Inc. (formerly Charter School Capital Inc.) operated three distinct business lines serving the charter school sector. "Money To Buy Your School" helped charter schools acquire and finance real estate through the company's special purpose entities. "Money To Run Your School" provided receivables financing to cash-strapped schools. "Kids To Fill Your School" offered enrollment marketing and website support services.
At its peak, the company supported more than 2 million students' education across approximately 1,000 of the roughly 8,000 charter schools in the United States. The business model relied heavily on the financing gap that charter schools faced due to their limited access to traditional municipal bond markets and banking relationships.
The Elementary and Secondary School Emergency Relief Fund (ESSER) and other pandemic-era programs fundamentally disrupted this model by providing charter schools with direct federal funding, eliminating their need for private financing solutions.
Orthogon Dispute Accelerates Downfall
The company's troubles were compounded by a bitter dispute with Orthogon Charter School Special Opportunities, which invested $11.6 million in preferred equity in 2023. After discovering errors in the financial diligence provided by Old School, Orthogon demanded return of its investment.
When the company was unable to quickly liquidate real estate acquisitions to satisfy Orthogon's demands, the investor commenced arbitration in December 2024. On May 22, 2025, an arbitrator awarded Orthogon $3.06 million plus interest, creating an immediate threat to the company's operations and forcing the bankruptcy filing on June 8, 2025.
The dispute also involved internal governance conflicts, with Orthogon's board representative Dr. Rishi Ganti opposing asset sales that the board had previously supported, according to court documents.
Asset Sale Provides Limited Recovery
Following the bankruptcy filing, Old School conducted a court-supervised auction process that resulted in the sale of substantially all business assets to New GS, LLC for an undisclosed amount. The sale, which closed on July 29, 2025, transferred the company's operating subsidiaries and ongoing business relationships to the purchaser.
Rock Creek Advisors, serving as the company's financial advisor, reached out to approximately 306 potential buyers but received no competing qualified bids beyond the stalking horse offer from New GS.
The proposed liquidation plan calls for a Plan Administrator to wind down the remaining assets and distribute proceeds to creditors and equity holders according to their legal priority. Administrative claims, priority tax claims, and general unsecured claims will be paid in full, while preferred equity holders face near-total losses.
The liquidation plan requires approval from holders of preferred equity interests, the only impaired class entitled to vote. A confirmation hearing has been scheduled but not yet set by the Delaware bankruptcy court.
The case is being handled by Potter Anderson & Corroon LLP as local counsel and Goodwin Procter LLP as lead counsel for the debtor. The bankruptcy case number is 25-11016 (CTG) in the U.S. Bankruptcy Court for the District of Delaware.
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