Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
ConnectEDU files for bankruptcy after Gates Foundation grant
Author: Joel R. Glucksman
Date: May 13, 2014
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Citing an inability to repay its over 200 creditors, college and career planning startup ConnectEDU filed for protection under Chapter 11 of the bankruptcy law on April 28, according to Inside Higher Ed. The company offers planning and tracking tools to aid students looking for colleges and post-college jobs that match their interests and abilities.
In July, the startup received a $499,375 grant from the Bill & Melinda Gates Foundation to create a platform for students to work together to learn Common Core standards for literacy, according to the news source. ConnectEDU is the second education-related startup funded by the foundation to be struggling financially. Student data repository inBloom announced its plans to shut down last week after receiving millions in startup funds from the foundation.
In its bankruptcy filing, embedded by BontInno, ConnectEDU estimated assets between $1 million to $10 million, compared to liabilities of $10 million to $50 million. The company listed Maryland ed-tech VC firm New Market Education Partners as its largest creditor, holding $1 million of its debt. The New York Times Co. and AOL were also listed as creditors.
Workers at the company received letters on April 28 notifying them that they were due to be terminated as of 3 p.m. the same day, according to BostInno. One anonymous employee told the news source that up to 50 employees lost their jobs, including CEO Evan Nisonson. CFO Paul Sheppard supported this statement, telling the news source that Nisonson is no longer with the company, but that he has been asked to stay on.
In a release sent to BostInno the afternoon of April 29, ConnectEDU indicated that it intended to pursue sale and restructuring alternatives that would enable the CourseEval business to exit Chapter 11.
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