WILMINGTON, Del. (Reuters) – Two U.S. manufacturers filed for bankruptcy on Monday with combined debts of about $600 million, both victims of the economic recession and frozen credit markets. One of the companies is RathGibson Inc of Lincolnshire, Illinois, which manufactures custom tubing and pipes for the chemical, energy and pharmaceutical industries, among others. RathGibson, [...]
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We barely bat an eyelash these days when a PE-backed company goes bankrupt, given the toxic mixture of economic shrinkage with massive debt loads. But we really need to take notice of what’s going on over at the (former) Connecticut School of Broadcasting, because it’s morally reprehensible.
CSB was a career college founded in 1964, with a focus on training students interested in radio or television. DLJ Growth Capital Partners, an affiliate of DLJ Merchant Banking, bought a majority stake in the company less than three years ago, in a transaction valued at approximately $50 million (around half in equity)
Under DLJ’s ownership, CSB quickly began adding new campuses. Under the economic downturn, however, it also began struggling to meet looming debt payments from lender PNC Financial.
A source says that DLJ repeatedly reached out to PNC about some sort of refinancing arrangement, but that it was unable to get a reply (I know, sounds a bit far-fetched). Then, in early March, CSB management suddenly realized that its checks were bouncing. The reason was that PNC had siezed the company’s assets, without first informing either the school or DLJ Growth Equity. On March 5, CSB notified students that all 26 of its campsuses were being shuttered, effective immediately. This included students who were in Week 15 of a 16-week course, for which they had paid around $12,000.