Blog post previously made on February 9, 2009:
Not much of a surprise for those following this blog, given their suspension of loan originations, board departures, rising delinquencies, missed rent payments, and inability to raise capital that they deemed necessary for survival. A Chapter 7 results in a liquidation of the company by the bankruptcy trustee, which means the company no longer continues as a "going concern."
Correction (May 11, 2009) - It has been brought to my attention that
Vishal Garg and Raza Khan, former executives at My Rich Uncle, have not
received any severance payments from MRU. According to their lawyer,
they have not filed a claim for severance payments in MRU's bankruptcy
and do not intend to pursue their severance payments in the future. A
previous version of this blog post had incorrectly stated that they had
already received the severance payments that they were entitled to
under their employment agreements and as described in an 8-K filing. I
regret the error.
Here is the contents of the press release:
NEW YORK, Feb. 9 /PRNewswire-FirstCall/ -- MRU Holdings, Inc. (Nasdaq: UNCL - News) today announced the filing of a voluntary petition in the United States Bankruptcy Court for the Southern
District of New York seeking relief under Chapter 7 of Title 11 of the United States Code. As a result, the Company has suspended all business operations. The Company expects that the Court will promptly appoint a bankruptcy trustee.
- MRU delinquency rates violate loan covenants; general counsel resigns (December 22, 2008)
- MRU in the balance? (November 14, 2008)
- MRU's 10-Q highlights immediate need for capital (November 11, 2008)
- Clear and upfront information: You be the judge (September 9, 2008)
- My Rich Uncle ceases federal loan programs for 2008-09 (June 30, 2008)
- My Rich Uncle not feeling so flush, pauses private lending (September 5, 2008)
Other facts: My Rich Uncle originated just over $200 million in private loans in 2007 and had approximately 1.3% share of the private student loan market.
Here is the Chronicle of Higher Education's article which generated quite a bit of commentary (for some reason my blog has been relatively comment free). I also stumbled upon this headline in the
Chronicle from July, 2007: College Lender Scandal has One Big Winner: My Rich Uncle. They were struck down by the same forces as other lenders; reduced subsidies on the FFELP side and rising
delinquencies in their private loan portfolios which made it hard to raise additional capital.
Looking for a private student loan? Check out the SLA Private Loan Ratings for a complete list of nine lenders who appeared most frequently on school lender lists. SLA receives no compensation from
any lenders so this is a truly independent list of lenders that is updated frequently.