The Education Resources Institute (TERI) Files for Chapter 11

Boston-based The Education Resources Institute (TERI), the oldest and largest non-profit guarantor of private education loans in the country, announced this week that it filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Massachusetts.

This action became necessary as the nation’s ongoing credit woes continue to cause unprecedented volatility in the student loan market and immense hardships on loan-related companies. Mounting difficulties in financing the securitization of private education loans, along with a rise in borrower defaults and delinquencies brought on by a slow economy, have adversely impacted TERI’s liquidity.

Under the protection of Chapter 11, TERI, while it restructures, expects to continue its operations and initiatives that promote college access and success. The portions of TERI’s activities that are grant and foundation-funded will not be affected by the filing.

“TERI made this difficult decision to allow us to refine our loan guarantee business while ensuring that we continue to provide high quality college access and assistance programs to underserved individuals seeking guidance,” said Willis J. Hulings III, TERI President and CEO. “Chapter 11 will provide us with the time and opportunity to determine how best to provide our programs and services for the long term in this challenging economy. We will be working with our partners and lenders to minimize disruptions to student loan borrowers.”

TERI has retained Goodwin Procter LLP as legal counsel and Grant Thornton LLP as advisors to the organization.