In late April, the president of Virginia Intermont College announced that following an unsuccessful attempt to merge with another educational institution, the college will soon lose its accreditation. The announcement followed an estimated seven-year struggle over finances, and in 2013, the Southern Association of Colleges and Schools Commission on Colleges held a vote that resulted in VI losing its membership and accreditation.
According to reports, the school had initially been placed on probation as early as 2007 due to concerns about its ability to pay its bills and provide educational services to its students. In documents filed as part of a lawsuit, it was revealed that the school had reached its $1 million credit limit and exhausted $375,821 in a promissory note. At one point, the school also reportedly borrowed more than half of its permanently restricted net assets. In addition, the university's president loaned the school almost $400,000 of her own funds.
The college filed a lawsuit in federal court against the SACS vote to drop the school from membership, which resulted in the injunction, allowing the school to maintain its accreditation until the injunction ends. The school was also offered an April 15 deadline to devise a plan to maintain accreditation, and the college's president entered into merger negotiations with Webber International University. While the merger would have allowed VI to operate under Webber's accreditation, the two schools could not reach a viable plan before the April deadline.
VI is scheduled to lose its accreditation July 1. Sources say that the school plans to continue operations beyond Spring graduation in May and offer an eight-week summer course. According to reports, administrators at the school were trying to help students transition to other colleges and universities.
The school's lawsuit and the granted injunction may have been designed to give VI time to try to develop a plan that would allow the college to continue operations. A lawyer who is familiar with business litigation might be able to develop a similar strategy for other clients who are involved in comparable disputes.
Source: TriCities, "Pending loss of accreditation after failed merger latest blows to VI", David McGee, April 21, 2014