Charter owes its creditors $135k

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March 12, 2013

Charter owes its creditors $135k

By Marjorie Nesin Staff Writer The Gloucester Daily Times Tue Mar 12, 2013, 12:00 AM EDT

Two months after Gloucester’s charter school rang its final dismissal bell, the school still faces more than $100,000 of debt and owes $35,000 to lenders, mostly trustees who loaned money interest-free as the school teetered on financial ruin.

The state’s Department of Education had hoped officials would have wrapped up closing procedures and dusted the chalk off their hands by the end of February, but a hefty list of closing procedures has kept trustees busy and forced trustees to continue working to tie up loose ends, like paying off their debts.

“Members of the board have spent weeks researching options and preparing for the (asset) sale,” Trustee David Buchanan said in an email to the Times.

About $45,734 of the money Gloucester Community Arts Charter School owes is due to a legal team, Foley Hoag LLP, while another $11,175 to Central Source, a business management team that specializes in charter school management plans, according to a school invoice dated March 5 and promissory note records provided by the Board of Trustees.

Tony Blackman, the school’s former executive director, who stepped down in September in what he then called an attempt to save money in the school’s budget, could still collect about $17,605 the school owes him. That total includes about $8,438 in vacation pay and a month’s pay of about $9,167, according to the invoice.

Trustees assigned priority of their dig out of debt on first repaying the promissory notes, each promissory note clearly stated.

”Funds will be used to repay the loans as a priority above other creditors,” the promissory notes read.

The handful of promissory notes reflects contributions from the school’s trustees, totaling $20,000. And the charter school building’s landlord, Peter M. “Mick” Lafata, appears as the lender on one $15,000 promissory note. All of the six notes are listed as interest free loans that were used on an emergency basis to pay employee salaries and wages, and were expected to be repaid with state funds.

The loan from Lafata exists in addition to the lease, according to the promissory note document. The invoice lists no lease debt, but notes the rent through December has been paid. Lafata had been expecting the school and the state to continue the public, independent school at least through its five-year charter, and by those calculations, would have collected another roughly $1 million on the school’s lease.

Four promissory notes from trustees represent loans amounting between $1,000 and $3,000 each, according to individual promissory notes.

The $15,000 loaned by Lafata and a $12,000 loan from Chair of Trustees James Caviston are additionally secured with the proceeds from a sale of school assets.

When the state found that the school was in such dire financial straights, the Department of Elementary and Secondary education approved the charter school to sell off everything left inside the building, though those items would usually roll over to state possession. Charter officials hosted a sale preview on Feb. 16, but the actual sale has yet to take place, as trustees were waiting on state approval of their sale method for a longer-than-expected period of time, trustees have said.

A final date for the sale and sale procedures had yet to be announced as of press time Monday. School officials also had not firmed out what type of sale they would carry out to raise the money. Buchanan noted that the board had found an auction would likely not be the best route, given that up to a third of the revenue would likely go to the auctioneer.

Also on the charter school’s debt list is $100 owed to the city for what is recorded on the invoice as a “back flow test.”

The charter owes a postage company called Pitney Bowes $385.40 in postage, and owes Eagle Tribune Publishing Company — parent company to the Gloucester Daily Times — $875 in advertising, according to the school’s invoice.

Marjorie Nesin can be reached at 978-283-7000, x3451, or at mnesin@gloucestertimes.com.