ESINQ ITT Educational Services Inc (CE)

Shuttered liberal-arts school Dowling College sought chapter 11 bankruptcy protection Tuesday in order to sell its Long Island campuses.

Dowling bankruptcy attorney Sean C. Southard said Tuesday that the school, which ceased operating in August after losing its accreditation, will use the breathing room of bankruptcy to sell its real estate and other remaining assets "for the maximum value achievable under the circumstances."

Dowling has two campuses to its name, one in Oakdale, N.Y., and the other in Shirley, N.Y. The school estimates its total assets to be worth between $100 million and $500 million, according to papers filed with the U.S. Bankruptcy Court in Central Islip, N.Y. It reported debts of $50 million to $100 million.

Mr. Southard, of the law firm Klestadt Winters Jureller Southard & Stevens LLP, said the bulk of Dowling's debt is owed on tax-exempt municipal bonds, although the school also has "a significant amount of general unsecured debt."

Some of the school's municipal bond debt issued in 2006 to finance a new sports facility last changed hands on Monday at 96.75 cents on the dollar, according to Municipal Securities Rulemaking Board data. The bonds were issued with an insurance policy from ACA Financial Guaranty Corp.

The 48-year-old school, which served more than 2,400 students, caught the eye of its accreditors last year as its financial position weakened. It became the first higher-education institution rated by Moody's Investors Service to default.

Dowling was a nonprofit institution, unlike for-profit school operators like Corinthian Colleges Inc. and ITT Educational Services Inc. that filed for bankruptcy after running afoul of regulators.

In November 2015, Dowling was required to prove why its accreditation shouldn't be revoked and demonstrate that it could continue to comply with commission standards for "institutional resources" and "documented financial resources."

Dowling briefly flirted with the idea of staying open with help from a strategic partner, but a deal to boost enrollment and shore up its multimillion-dollar debt load ultimately fell through.

Dowling's chief restructuring officer is Robert S. Rosenfeld of RSR Consulting LLC. Court papers show that its real-estate brokers include CBRE Inc. and A&G Realty Partners LLC.

Zolan Kanno-Youngs contributed to this article.

Write to Andrew Scurria at andrew.scurria@wsj.com

(END) Dow Jones Newswires

November 29, 2016 19:35 ET (00:35 GMT)

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