The embattled UW-Oshkosh Foundation, whose top officials were sued by the UW System in January for mishandling funds and making illegal financial guarantees, will file for Chapter 11 bankruptcy.
The foundation said in a statement Thursday that a “policy flip-flop” and “ill-advised political gamesmanship” on the part of the Board of Regents forced its decision.
The Board of Regents backed out of a potential deal to use taxpayer dollars to aid the foundation in paying off its debts in June, with the board’s Audit Committee Chair Michael Grebe saying using state funds would be “inappropriate.”
In a statement Thursday, Tim Mulloy, the chairman of the UW-Oshkosh Foundation’s board, said the Board of Regents “walked away from a fair resolution,” leaving the foundation with “very few options.”
“When the projects at the core of this matter were first proposed several years ago, the Board of Regents was a strong, public supporter,” Mulloy said in the statement. “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.”
The Board of Regents chose to withhold state funds after state Sen. Stephen Nass, R-Whitewater, urged it to do so in June.
“You need to keep your commitment that the public won't be forced to fund the inappropriate decisions of two campus administrators and the failed oversight of the System,” Nass wrote in an email to the Board of Regents.
Mulloy chastised the June decision, saying the Board “bow[ed] to political pressure.”
“The UW Board of Regents first abandoned its old public position and then bowed to State Capitol gamesmanship and pulled the rug out from under the feet of the parties who had developed a reasonable solution that would have avoided litigation and eliminated the need for our Foundation to file for reorganization,” Mulloy said.
Paul Swanson, an attorney representing the foundation, said filing a reorganization petition under Chapter 11 of the federal bankruptcy laws will allow “all involved parties, including the Foundation, to be heard and have their disputes resolved.”
“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,” Swanson said.
A spokesperson for the UW System did not respond to request for comment.
