Judge allows Corinthian not to disclose its dire financial condition
California Superior Court Judge Curtis Karnow in San Francisco gave a big relief to Corinthian Colleges Inc. by not forcing it to disclose its potential financial risks.
The office of California Attorney General Kamala Harris had asked the court to order Corinthian Colleges to disclose that it was facing risks of financial collapse and would sell or close its schools.
But, the for-profit operator and owner of career schools defeated the bid by persuading the judge to believe its claim that disclosing its dire financial condition would scare off prospective students and owners, which would put it into a death spiral.
Pronouncing the ruling, Karnow said, "The harm shown by the AG is also relatively low. No one would be signing up based on misleading statements, no money would be changing hands based on those statements."
Corinthian serves nearly 72,000 students through its various brands, including Everest and Heald. On July 3, it reached a deal with the United States Education Department on a plan to sell or close its 107 schools and colleges in the United States and Canada.
It has plans to sell 85 schools in the United States and Canada, and gradually shut down operations at twelve other locations in the United States.
The U. S. Education Department has confirmed that it would provide $35 million in student aid to allow Corinthian to continue classes for existing students.
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