(AJC) -- Morris Brown College officials have filed for Chapter 11 bankruptcy in a last ditch effort to prevent the 131-year-old school from being foreclosed on and sold at auction, and to give them time to regroup.
Morris Brown, which is more than $30 million in debt, was facing foreclosure next month after investors called $13 million worth of bonds tied to the college. The bonds were issued by the Fulton County Development Authority in 1996. As security for the bonds, Morris Brown pledged several pieces of property, including the school's administration building. An auction of assets had been scheduled for Sept. 4.
"The trustees are taking several deliberate actions to insure that we not only survive, but thrive," board Chairman Preston W. Williams said Saturday. "Our commitment is to focus on restructuring and making it possible for us to survive another day."
Chapter 11 is part of the U.S. Bankruptcy Code, which permits reorganization and gives federal protection to businesses unable to pay their debts.
Renardo Hicks, an attorney for Morris Brown, said the emergency filing automatically delays the foreclosure until a judge decides otherwise.
"Our expectation is that the sheriff's sale will not happen," Hicks said.
Morris Brown President Stanley Pritchett said the filing will give the school breathing room to find a steady stream of capital to keep it afloat.
"We are making a statement that Morris Brown College is not going anywhere," Pritchett said. "We are not going to allow this latest challenge to get in the way of what we are trying to do."