Disputed Pact with Windrush Head Wins Conditional Court OK

The prospect of El Cerrito's Windrush School being able to finish the current school year appeared to brighten Wednesday when a U.S. Bankruptcy Court judge conditionally approved a contested settlement for the departing head of school.

The approval becomes final if, as expected, debt-ridden Windrush relinquishes bankruptcy protection next month.

The court has already approved a different settlement reached Dec. 1 between the K-8 private school and its creditors, represented by Wells Fargo Bank. That deal includes Windrush leaving the bankruptcy shelter and being allowed to continue operating the rest of this school year. The court hearing on determining whether the school has met the requirements of its agreeent with Wells Fargo and on dissolving the bankruptcy status is scheduled for Feb. 8.

The separate but related settlement between Windrush and its controversial head of school, Ilana Kaufman, did not appear to delight any of the parties in court Wednesday. Bankruptcy Court Judge William Lafferty observed after his ruling, "No victory laps here."

The attorney for Windrush, Merle Meyers, said during his arguments, "It's been said many times that the hallmark of a good settlement in that everyone walks away unhappy." He was on the winning side. The motion to approve the Kaufman agreement was made by the school and opposed by Wells Fargo.

The attorney for the bank, Mike Buckley, argued in court filings before the hearing that "the settlement is far beyond improvident and borders on the outrageous."

Kaufman did not attend the court session. A brief filed by her attorney, Jody LeWitter, said Kaufman would not attend in part because Kaufman will pursue litigation against the school if the agreement is not approved. "We will not voluntarily produce Ms. Kaufman for testimony (on Jan. 25) as there is no reason we would voluntarily provide Windrush with two bites at the proverbial apple in terms of her testimony," LeWitter's filing said.

Judge Lafferty acknowledged that some parts of the deal troubled him but that the imperfections were counterbalanced by the promise of legal peace in the disruptive, expensive bankruptcy battle that has roiled the school since Windrush filed for Chapter 11 bankruptcy protection on Sept. 30. And he added that any defects were outweighed especially by the paramount goal of ensuring that the children continue to have a school for the remainder of the year. 

Meyers told the court that the school's ability to meet the requirements of its settlement with Wells Fargo depended on approval of the Kaufman agreement.

Windrush was on the in late September when its board disclosed that Wells Fargo was taking court action to seize the school as collateral and that Windrush did not have enough funds to continue operations.

The school, which had defaulted in June on a $357,500 debt payment on $13 million in school-issued construction bonds, launched a successful emergency fund-raising drive in conjunction with the bankruptcy move. Through negotiations with Wells Fargo Bank, Windrush reached the Dec. 1 settlement with the bondholders that would allow the school to finish the school year, subject to strict financial conditions and maintaining a minimum enrollment of 105 students at the end of December and January. The school currently has 109 students, according to the board.

Windrush also negotiated a settlement with Kaufman that laid out financial terms for from Windrush on March 15. Wells Fargo objected, saying it was too generous, and Windrush argued that it represented savings for the school, as well as protection against Kaufman's potential liability claims against the school.

A chief issue in the deal revolved around approximately $80,000 that Kaufman received as in-lieu vacation and advance compensation shortly before the school filed for bankruptcy protection on September 30. Wells Fargo demanded that the funds be returned, and the school's settlement with Kaufman requires her to repay $30,000, with the remaining $50,000 to come from the school.

In return, Meyers said, Kaufman relinquishes the severance pay due to her under contract, which would be $110,000 or 50 percent of her salary. She would also give up any legal claims against Windrush. Kaufman, who has been the target of harsh criticism from several parents, said the school board was negligent in failing to protect her from hostile criticism and abuse.

Other issues aired at Wednesday's two-hour-plus hearing included the amount of Kaufman's pay. Windrush board chair Sarah Flowers, herself a former head of school at Archway School, said in sworn testimony that Kaufman's annual salary of approximately $220,000 is in the median range for heads of school in the Bay Area. Buckley indicated that her compensation is more like $300,000 when other elements like the housing allowance, professional development allowance, health insurance and Windrush tuition subsidy are included.

Also debated were the provisions in Kaufman's contract allowing her to take in-lieu pay for her yearly six weeks of vacation.

No longer acting as the school's top administrator, Kaufman's duties until March 15 include management of the accounting and reporting requirements of the school settlement with Wells Fargo.

In the end, Lafferty said he sees the Kaufman settlement as "a reasonably acceptable outcome." One of the benefits, he said, is that it "allows the possibility of Windrush 2.0," referring to a continuation of the school in a new form in the 2012-13 school year.

Some members of the school community have been working on potential options for continuing the school next year, possibly through a merger with another school. The settlement with Wells Fargo gives the school property to the bondholders, though no decision has been announced on their plans for the property after June or whether they would be willing to consider an agreement to allow Windrush to remain.

For more background on the Windrush crisis, you can see our past stories by clicking "Windrush School" next to Related Topics below this article. For alerts on future Windrush stories, click the "Keep me posted!" button below the article. We've also posted a list of all Patch stories on the Windrush crisis at the top of our original article, "Crisis at Windrush School: Threat of Imminent Closure."