Final Post For Awhile: Byrnes Settlement Agreement with First Citizens

Greetings all and many thanks to all of those who have participated in the discussion here.  I know that emotions have often run very hot, but I appreciate the contributions and dissenting viewpoints that have been put forth here by others. 

It's only fitting that this blog should wrap up as the bankruptcy saga now comes to a close, although I would argue that the odds of Byrnes surviving even this settlement agreement are not very good.  I think all those at Byrnes, either as parents or employees, should read this closely and be aware of the terms of the settlement and hold the management team accountable for their actions going forward.  While this agreement does get them out of bankruptcy, it opens the door for even more serious trouble in the future.

For anyone who wants to read the filing yourself, go to www.pacer.gov and search under "bankruptcy" and "south carolina" and do a search for case number 11-00538.  Click on "History/documents" and scroll to the bottom and click on the filing labeled "Addendum" filed on August 4th 2011.  There are some charges to use Pacer, but they are negligible and if you use less the $10 worth per 3-month quarter, they waive them entirely, so it should cost nothing to get this document yourself if you'd like to read it.  I suggest that anyone with a vested interest in Byrnes' future give it a good read as it may prove vital in the months and years ahead.  Part of the settlement includes a press release with wording agreed to by both FC and Byrnes, but even so, everyone should read the terms for themselves and consider them in light of Byrnes' past financial history.

So, in a nutshell, here's the settlement agreement:

• FC retains the full value of their secured claim (~$1.6million)
• Byrnes will pay $11,000 a month for 1 year
• After that, they pay $13k a month
• The loan matures(due in full) by August of 2017, ie. six years
• If they can pay it in full earlier, Byrnes can have a substantial part of the debt forgiven (for example, if they pay up by 2013, they only owe $1.2 million instead of $1.6mil.
• If Byrnes defaults again, FC can immediately take possession and sell the property
• Byrnes waives the right for bankruptcy protection in the future until the FC loan is paid

That's the deal in a nutshell, and FC's attorneys would have been insane to turn down such an offer.  I'm curious to read a transcript of the hearing if one ever gets released, because this deal represents very thin ice for Byrnes and they must have been backed into a corner to agree to such a thing.  Granted, it's better than having the school shut down and sold, but it leaves that as still a very real possibility.  In fact, it's an even greater possibility than before because this deal basically waives all of Byrnes' rights for protection should they have financial troubles in the future!

Nowhere in any court filings have there been any hints as to austerity measures being enacted at the school, but that is exactly what will have to happen if it is to survive (barring the board members all chipping in enough money to pay off the 1.2 million dollar early payoff value).  None of this changes the documented fact that the school was and is hemorrhaging money and carrying a payroll that they don't need and can't afford.  Unless the donors keep chipping in 200-300k per year, there is no way they can make these payments and make payroll.  Lets not forget that the year before the bankruptcy they had to borrow nearly $700,000 just to make payroll and at the time were not even making payments to FC. 

For those who want to see the school survive, here's what I would suggest:

• Demand a complete upper management change over the next 1-2 years, bringing in a brand new board, headmaster, and financial manager.
• Demand a grand cost-cutting package that eliminates 200-300k in salaries and possibly more from other areas.  Too much money is frittered away and the school can't afford it.  If the board won't do it, replace them with those who will. 
• While hiring a dean of academics sounds nice, the school can't afford another salary at a time like this.
• Demand that free tuition for recruiting athletes be eliminated.  Remember, not only are these kids not generating revenue, but they are incurring extra costs associated with the team that the school is writing off (travel, uniforms, free lunches, etc.)

If the school can't make the hard choices needed, they don't deserve to survive.  I know, they like to use the smoke and mirrors of using next year's money for this year's expenses and claim that their income meets or exceeds expenses every year.  In response to that, everyone should quote what the Bankruptcy judge said when they tried it on him: "So what are we doing here?"

I would again like to thank the readers and contributors to this blog.  I would like to think that together we've brought to light many unpleasant truths that would otherwise remain the domain of rumor and innuendo.  Perhaps now that more of the truth is in the open, steps can be taken to address it.  I'm removing older posts since at this point they are no longer as relevant and we should all be focused on the future.  I am personally not optimistic about their chances of surviving the next couple years given recent economic trends and their lack of future bankruptcy protection; however, since they can't again be in bankruptcy for this particular debt, we can safely say the bankruptcy saga is at an end.  There may be a "Byrnes Defaulted Again and Now They're Closed" saga in the near future, but that is another story for another day. 

Good luck to all in this coming year. 

Free Tuition For Many Athletes Inflates Enrollment

Since this topic has been coming up repeatedly in the comments on other posts, we felt it deserved its own full-length post. 

It's not much of a secret that a few years ago, Byrnes started recruiting student athletes from local public schools and offered them free tuition at Byrnes in exchange for play.  Considering the record of the football and basketball team before this practice started, perhaps this wasn't such a bad idea!  What many have also come to realize is that some of these players' siblings were also given free tuition along with somewhat of a carte blanche as far as behavior is concerned.  More than one person has already commented here that this has become a safety concern for them and prompted them to remove their children from the school. 

All the details and numbers after the jump

Byrnes Schools of Florence: Enrollment Still Down

Before we begin, the BSBS blog would like to thank all of those who have posted and/or emailed their support in recent days.  We're already number one in search engine rankings for anything related to Byrnes and bankruptcy, finances, salary, sex offenders, etc., and we're on the first or second page in most other searches.  For those who wish to help, link to our site from your site or your Facebook and help continue to drive traffic and search rank so we may continue to spread the word. 

Also, for those who've asked how they can help, a request for information:  In 2004, current Byrnes headmaster John Colby was headmaster for Patrick Henry Academy in Estill, SC.  From their financial documents, it looks like Mr. Colby's employment was terminated in the middle of his contract and he left the state immediately afterwards.  This is highly unusual and financial documents don't tell the whole story, so anyone who does know, please hit us up in the comments or in an email.  It may be nothing and totally innocuous, or there may be a story that goes with it that parents and faculty would be interested in hearing. 

A number have asked about our investigation into parents and others at the Byrnes School.  While this will be the subject of future posts as we gather more information, we can say that we've already found a number of parents who have filed for bankruptcy themselves, some very recently and not people you would expect.  We've found a current board member dodging the IRS and actually being sued by the IRS, not to mention his being sued for legal malpractice and other such things.  And we haven't even gotten to the juicy stuff yet!  Look for a larger post in the future as we lay out our findings and show the other parents what sort of people are sending their kids to Byrnes.

Enrollment at the school for next year continues to be down substantially.  March 31st was the deadline for early enrollment, so we should now have a good idea of what enrollment looks like for next year.  In perusing their most recent operating reports and tuition reports per their cash collateral settlement, it is clear that enrollment is still down well over 50% over where it needs to be.  Depending on how they've done their accounting, the number could be anywhere from 50-60% down.  Of course, when your finance director's only qualification is a degree from an online-only college, you have to allow for some fluctuation in the accounting.  She's already had to resubmit a number of forms to the court because they were missing something, so this may not be completely reliable either. So, while some students will probably trickle in over the summer, it's hard to believe that more than half of the entire student body will wait til the last minute to renew.  Clearly, people realize that the school will probably not be here much longer and don't want their kids left without a place to go, though about half are still believing the lies and the spin proffered by the board and administration.

A strong piece of evidence for this is a name missing from the enrollment list for next year: Ashby Gregg.  Mr. Gregg has been a long time Byrnes supporter and even president of the board at one time, but it looks like he has chosen to remove his children from the school for next year.  We noticed this omission back in March, but now that it's May and he still isn't on the list, we can assume that he's decided to send his kids elsewhere.  When a major supporter who is in the know takes his kids out, other parents need to evaluate their own decision and ask themselves what Mr. Gregg knows that they don't know.  Just like a restaurant where the owner won't eat the food, be careful what you swallow.

Maybe he realizes the just how precarious their financial situation is at this point.  Perhaps he doesn't want his children playing so close to a convicted rapist or one of the only convicted child sex predators in the county.  Maybe he got tired of being lied to by the lies of John Isgett and Tom Goodson, men whose lies and spins are well documented here in previous posts. In any case, Mr. Gregg's choice to pull his kids from the school should weigh heavily in parents' minds as they decide where to send their own children next year.