El Cerrito's reported that it met Dec. 31 mininums for revenue and enrollment required for the school to keep operating under an agreement with its creditors, but the school's survival remains clouded by a heated dispute over a proposed departure settlement with the controversial head of school.
The K-8 private school and Wells Fargo Bank, trustee for the creditors, will appear at a 9:30 a.m. hearing today, Wednesday, in U.S. Bankruptcy Court in Oakland on the school's motion to win approval of settlement terms.
Two settlement agreements are at stake. One is between the school and the creditors, who hold $13 million worth of bonds issued by the school in 2007 for a new middle school/library building and refurbishing the gym. The other is between the school and Head of School Ilana Kaufman to set financial conditions for Kaufman's departure on March 15.
The school defaulted on debt payments in June, and Wells Fargo Bank filed suit in August seeking forfeiture of the school property, which is collateral for the debt. The school on Sept. 30 to stop seizure and has been afforded interim bankruptcy protection pending a ruling by the Bankruptcy Court.
With court encouragement, the two sides reached a that calls for turning the school over to the bondholders and allowing Windrush to continue operating rent-free until at least the end of this school year, if the school meets certain benchmarks. The benchmarks included a minimum of 105 students on Dec. 31 and Jan. 31, and post-Sept. 30 revenue of at least $980,000 by Dec. 31 and at least $1,187,000 by Jan. 31.
"All December 31 benchmarks have been timely achieved, including revenue levels, student headcount, expense limits and ending cash balances," Merle Meyers, attorney for Windrush, told Patch Tuesday.
A Dec. 31 message from the school's board said enrollment stood at 119, or 14 above the minimum, and cash receipts after Sept. 30 were $1,109,476, or $129,476 above the required amount. The school mounted two intense fundraising campaigns, in the on Sept. 27, and to join the existing eight members on the board.
Though the school-creditor agreement appeared to be on track, the proposed agreement between Windrush and Kaufman was the subject of strongly worded accusations in court filings from both sides in advance of today's hearing. The school argued in its court filings that blocking the Kaufman agreement could prevent Windrush from meeting the terms of the settlement with Wells Fargo intended to keep the school operating the rest of this year.
A filing by attorney Mike Buckley, representing Wells Fargo, objects to the Kaufman settlement, which calls for her to assume responsibility until March 15 for insuring the school's compliance with the financial reporting obligations to Wells Fargo.
"Ms. Kaufman has been at the helm during Debtor’s precipitous fall in enrollment, collapsing financial picture and management disarray, all culminating in the filing of this Bankruptcy case," according to Buckley's filing. "Even since the filing, Debtor’s reporting and account management has been chaotic and full of errors."
The Wells Fargo allegations about shoddy financial reporting by Windrush under Kaufman's watch are "untrue," according to papers filed by Meyers on behalf of the school. "There is no evidence of 'chaotic' or error-prone reporting by the Debtor, much less any implication of error by Ms. Kaufman in the process."
Wells Fargo objected also to the settlement offering Kaufman "a general release" from obligations. The pact would have Kaufman repay $30,000 of the approximately $80,000 she received shortly before the bankruptcy filing as in-lieu vacation and deferred compensation. "The facts point to those payments being fraudulent transfers that the Debtor could recover non-consensually," according to the Wells Fargo filing.
Court papers from Windrush accuse Wells Fargo of being "intent on causing the shutdown of the Debtor’s operations, regardless of its impact on students, faculty, staff and others," and attempting "to scuttle the Debtor’s companion settlement with Ms. Kaufman."
The bank's "bad faith" attack on the Kaufman settlement is designed "to remove a linchpin in the Debtor’s continuing ability to perform its settlement with Wells Fargo, and thereby cause default under the Wells Fargo settlement by other means," according to the Windrush filing. If the school defaults on its settlement obligations with Wells Fargo, it would be required to shut down within 30 days, absent forgiveness from the bank.
Windrush's court papers argue that the pact with Kaufman would save the school money by eliminating the threat of expensive litigation with Kaufman, who "contends that she is entitled to damages for the Debtor’s alleged failure to provide to her a safe and secure work environment, in light of verbal attacks made against her on campus and elsewhere in the last several months, by third parties." Kaufman has been the target of vociferous criticism in reader comments on Patch and at a .
The Wells Fargo filing disputed the assertion that the school faces potential liability court costs, saying there's a "lack of flesh on the bones of this possible dispute" between Kaufman and the school. "Nowhere in the papers supporting the motion are there any facts showing that Ms. Kaufman has a potentially viable claim against Debtor," the bank said.
The school's agreement with Kaufman would also release the school from its contract obligation to provide her with a severance payment of approximately $110,000, or six months of salary, according the school's filing. "Under the proposed settlement agreement, Ms. Kaufman will waive any right to such severance," the school said in its filings. "The Debtor will thus be relieved of this obligation, for which it would have had no source for payment."
Kaufman became Windrush head of school on July 1, 2007, and her current contract extends to June 30, 2015.
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."
