Dive Brief:
- 2U Inc. filed for Chapter 11 bankruptcy Thursday with plans to restructure and reduce its debt load.
- On filing, the online program manager had an agreement with lenders and bondholders representing about 87% of its outstanding debt that would provide about $110 million of new capital, reduce its debt by over 50% to some $459 million, according to a press release. The deal will require court approval.
- The company has been struggling in recent years under a heavy debt load, much of it taken on to support its acquisition of edX, and as demand for its services has waned.
Dive Insight:
2U has come under increasing financial distress as its revenue declined, in part because some of its university clients, such as University of Southern California, have scaled back their relationship with the OPM.
In February and early March, 2U issued its first “going concern” warnings about its ability to stay solvent and continue operating in documents filed with the U.S. Securities and Exchange Commission.
A spokesperson with the U.S. Department of Education told Higher Ed Dive in March that it was “concerned” about the impact a potential financial failure of 2U and other online program management companies would have on students.
This is a developing story and will be updated.
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