BRADENTON, Fla. - The Virginia Supreme Court is ordering a lower court judge to take another look at legal efforts aimed at preventing financially troubled Sweet Briar College from closing.
The court order handed down June 9 stems from a series of legal challenges begun by Amherst County Attorney Ellen Bowyer, alumnae, and faculty, who sought a temporary injunction in circuit court to prevent the 114-year-old women's institution in central Virginia from being shuttered.
Sweet Briar's board of directors announced in March that the college would close after the summer session ends Aug. 25 citing "insurmountable financial challenges" that include declining enrollment and an unsustainable increase in the tuition discount rate to attract students to the small, private liberal arts college near Lynchburg.
Bowyer and college supporters filed a lawsuit claiming that since the college is operated by a trust, its decisions are subject to court review. They have also claimed that Sweet Briar's dim finances have been overblown.
The Virginia Supreme Court said that the lower court judge reached the wrong conclusion in April when denying an injunction because Sweet Briar is a non-stock corporation.
"It appears from the record that the circuit court's action regarding the temporary injunction was predicated, at least in part, upon the legal conclusion that the law of trusts cannot apply to a corporation. This legal conclusion was erroneous," the Supreme Court ruling said. "The law of trusts can apply to a corporation."
The circuit court was ordered to reconsider its decision on the injunction.
After Sweet Briar decided to close, Standard & Poor's downgraded the college's 2006 educational facilities revenue refunding bonds to B-minus from BBB. S&P also placed the junk rating on $16.52 million in outstanding bonds on CreditWatch with negative implications.
The bonds were issued by the Amherst Industrial Development Authority.
On March 5, Sweet Briar spokeswoman Christy Jackson told The Bond Buyer that the college planned to pay its debts. Jackson also said that the trustee would be contacted to discuss communications with bondholders.
