Somerset Hills works on restructure after filing for Chapter 11

Children with severe disabilities who did not fit into the public school system were able to turn to Somerset Hills to learn and be treated. The New Jersey center consisted of a school for disabled children and a center for treating related illnesses. The center has now been forced to close and file for Chapter 11 bankruptcy protection in order to attempt to restructure and pay down some of its debt. The school ended up with over $3 million in debt, $1 million of which is to be paid to past and present employees into their pension funds.

An investigation looked into the alleged spending of taxpayer-funding as well as accusations that children were being put into restraints without just cause. After the Department of Children and Families found out about the investigation, they disconnected themselves from the treatment center and forced it to shut down. With the center closed, court documents revealed that the center's debts far outweighed its income, and the drop in enrollment equated to a large drop in revenue.

According to the bankruptcy filing, the school had no longer been putting money into the employees' pension fund. A group of past employees threatened to file a lawsuit, claiming that they were given false security about their jobs and then were laid off without much notice. The landlord of the property where the school was previously located is seeking $1.6 million in unpaid bills, rent and money for damages. Court documents show that the school also owes significant debt to other businesses as well.

Somerset Hills' owner stated that filing for Chapter 11 was a way to ensure that the school could continue on in the future. The New Jersey school would be staying open during the Chapter 11 process as not to interrupt the students' education. By filing for Chapter 11, the company is given some relief from creditors as it tries to keep its doors open and find ways to pay off its debt. Companies that are falling on hard times may consider filing for Chapter 11 bankruptcy protection as a way to restructure and emerge on top again with a strong business plan in place for a successful future.

Source: nj.com, "N.J. private school for disabled children files for Chapter 11 bankruptcy", Christopher Baxter, Aug. 6, 2014

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