Foundation representative Evan Zeppos said scholarships and funds donated to the UWO Foundation are safe and cannot be used for things other than the purpose intended.
“The vast majority of the funds held are in endowed funds, which means the main part of such a gift is held in perpetuity and only the income is used as directed by the donor,” Zeppos said.
Zeppos said the Foundation takes the position that funds are held in trust for the purpose for which they were donated.
“There is currently a motion in front of the bankruptcy court to confirm this position,” Zeppos said.
On Aug. 17, the Foundation filed a reorganization petition under Chapter 11 of federal bankruptcy laws.
According to Zeppos, the Foundation is continuing to operate business as usual during the Chapter 11 proceeding and reorganize and protect funds held in trust and resolve all issues within the structure of an orderly process.
“[The Foundation] may sell or otherwise dispose of certain assets, with court approval, and may enter into settlements with certain creditors that may be advantageous to all parties,” Zeppos said.
A “policy flip-flop” and “ill-advised political gamesmanship” by the Board of Regents of the University of Wisconsin System caused the Foundation to file for reorganization, the press release stated.
Chairman of the Foundation’s board Tim Mulloy said in the release if it weren’t for the Regents’ short-sighted decision to reverse its earlier support and give in to political pressure, bankruptcy could have been avoided.
“When the projects at the core of this matter were first proposed several years ago, the Board of Regents was a strong, public supporter and even participated in celebratory events marking the completion of them,” Mulloy said. “But last summer, the Board suddenly had a change of heart and reneged on its earlier commitments and previously-approved lease agreements, reversing a policy that went back many years.”
Zeppos said the Foundation, as the debtor, will propose a plan of reorganization which adjusts the relationship between it and its creditors.
“This is a process under Federal law that allows for the orderly reorganization of a debtor (the Foundation) and which ‘stays’ all other actions in any Court to collect a debt,” Zeppos said.
Paul Swanson, an Oshkosh attorney representing the Foundation in the Chapter 11 proceeding, said in the press release the foundation’s endowments and other donations are safe during the reorganization.
“This filing will provide a single forum for all involved parties, including the Foundation, to be heard and have their disputes resolved,” Swanson said in the release. “Most important, it will allow the Foundation to continue its charitable mission, which is to serve UW-Oshkosh and its students, free from the claims of its creditors.”
Zeppos said the Foundation will ask the court to determine the validity of promises or “guarantees” and this action by the court is similar to the lawsuit question, except answered in bankruptcy court.
“The Federal Bankruptcy Court is accustomed to dealing with complex commercial issues such as these, and much of the decision to utilize Chapter 11 was based on this fact,” Zeppos said.
The process of Chapter 11 will give the Foundation time, without having to expend resources on multiple litigations, to formulate a Reorganization Plan, which will help deal with claims against the foundation fairly, Zeppos said.
“It provides a forum to determine that the Endowment and Restricted Funds are held in trust to be used for the intended purpose of the donors,” Zeppos said.
Mulloy said the Foundation has raised more than $20 million for the betterment of UW Oshkosh and takes its obligation to protect their donors and further their mission seriously.
“While we would have preferred to avoid this step, it is the best way for us to get on with our mission and return our focus to helping make UW-Oshkosh an even better university than it already is today,” Mulloy said in the statement.
