Debt-ridden Dowling College has filed for Chapter 11 bankruptcy with two of its Long Island properties now on the market in an effort to aid bondholders.
The two properties now available for purchase were previously occupied by the shuttered private school. For sale are 25 acres in Oakdale, N.Y. and 101 acres in Shirley, N.Y. Brokerage firms A&G Realty Partners and Madison Hawk are leading the sales through separate sealed bids. The chief restructuring officer is Robert Rosenfeld, whose firm RSR Consulting is managing the dissolution of the Dowling College estate.
"There's been tremendous interest in the campuses since the school ceased operations," Jeff Hubbard, president of Madison Hawk, said in a statement. "Despite the Chapter 11 proceedings and wind-down of Dowling's operations, we have been afforded ample time to sell the properties and proposed an orderly sealed bid format to maximize their value as opposed to simply conducting a liquidation sale."
Dowling had more than $54 million in debt outstanding at time of its announced closure in August. Moody's Investors Service rates Dowling bonds at Ca and expects bondholders to receive a recovery rate of 35% to 65%. The school defaulted in July 2015 on debt payments owed for bonds issued through the Suffolk County Industrial Development Agency and the Town of Brookhaven Industrial Development Agency. S&P Global Ratings slashed Dowling's debt to D from B in August 2015 after the default.
A majority of Dowling's bonds are insured through ACA Financial Guarantee Corp. with mortgage liens that provide funding to bondholders if the school's properties are sold. Rosenfeld said the mortgage liens mean that bondholders would get paid first among the creditors. The arrangement is still subject to approval in bankruptcy court.
The brokerage firms are accepting bids for the Oakdale property and Rosenfeld said they hope to sell the parcel in the next three to five months. The firms are slated to begin selling the Shirley campus in the 2017 first quarter.
