SVC bankruptcy filing is dismissed

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This story was updated at 9:35 a.m. on July 10, 2020.

BENNINGTON — At the request of the court-appointed trustee, Southern Vermont College's Chapter 7 bankruptcy case has been dismissed, potentially delaying any auction or other dispersal of the former school's assets.

Raymond Obuchowski, who was named June 30 to consider issues around the liquidation of the former college's assets, said Thursday he requested the dismissal after learning on July 3 that a summer camp for some 350 youth would begin on the campus on July 5.

He said he felt he could not move forward with the Chapter 7 liquidation process without assurances that the camp would pose no financial or safety liabilities for the estate.

"I did not have sufficient information" to make that decision, Obuchowski said, noting that he learned that the camp would still be held the day before the holiday weekend and could not readily obtain the assurances he needed.

Obuchowski said he had assumed the previously arranged summer camp would not proceed given the SVC trustees' decision to voluntarily enter the college corporation in the Chapter 7 process to liquidate the campus real estate and other assets.

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A campus lease agreement allowing the summer campers was previously concluded between the trustees and Moshe Perlstein and his not-for-profit organization, Zichron Chaim, which also had negotiated a purchase agreement for the 371-acre campus.

According to Perlstein, the current three-week camp for youth from the New Jersey-New York area on the SVC campus will be followed by a second camp for three weeks. The first camp is for girls, he said, while the second is planned for boys.

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Obuchowski filed a motion for dismissal of the Chapter 7 case on July 3, and an emergency court hearing was held on July 4. U.S. Bankruptcy Court Judge Colleen Brown granted the motion and dismissed the case without prejudice on July 4.

Obuchowski was discharged as bankruptcy trustee at his request at that time.

The college apparently could again voluntarily file for Chapter 7, but the issues of potential financial or safety liability raised by Obuchowski would have to be addressed, and court approval would be required for the camps to continue during an ongoing liquidation process.

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Obuchowski had said his plan was to discuss with the major mortgage-holder, Community Bank, and other creditors possible agreements that could lead to auctions or other dispersal of the college assets. He said he hoped to seek court approval for an auction or auctions by late August.

Obuchowski said he hoped for agreements to "carve out" some revenue from sale of assets for other creditors. The bank is owed approximately $5.5 million, which is secured by main campus real estate that is valued at about $5.7 million. 

The Chapter 7 dismissal apparently leaves the former college corporation again as owner of record of the campus. Former Trustee Chairman David Newell deferred comment Thursday to legal counsel. He had said upon the Chapter 7 filing that the board afterward dissolved with all the trustees resigning.

Attorney Heather Cooper, of Facey Goss & McPhee, of Rutland, who is representing the college corporation, also could not be reached Thursday afternoon.

Jim Therrien writes for New England Newspapers in Southern Vermont, including the Bennington Banner, Brattleboro Reformer and Manchester Journal. Twitter: @BB_therrien


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