Lawsuit Alleges For-Profit College Operator Hasn't Paid Its Rent

Corinthian Colleges is also planning to sell off assets to raise much-needed cash, it told investors yesterday.

Beleaguered for-profit college operator Corinthian Colleges has failed to pay more than $380,000 of rent on its corporate headquarters, according to allegations in a previously unreported lawsuit filed last week in California. The lawsuit, filed by Corinthian's landlord, suggests the company's cash situation might be even more dire than previously understood and that the company may not have funds to pay rent on its own headquarters.

Corinthian, which has more than 70,000 students at its campuses nationwide, has been desperately trying to raise money this week in an attempt to keep from shutting down altogether. It even announced plans to sell off equipment belonging to its chain of automotive schools, in addition to some of its real estate and student loan notes. After the Department of Education cut off Corinthian's access to federal student loan money, which makes up the vast majority of the company's revenue, Corinthian reached an agreement to sell or close all of its campuses within six months. That agreement temporarily averted immediate bankruptcy for Corinthian, but the company has still been struggling to come up with the money it needs to keep schools open until it manages to sell them.

The suit by Corinthian's landlord alleges that the company hasn't paid a cent of the $381,000 that it owes in rent on its headquarters in Santa Ana, Calif., though it continues to occupy the space. Corinthian's executives could be forced out of their corporate suite if the landlord wins the suit.

Yesterday, the company landed in more hot water after another attempt to raise the cash it needs to keep operations going. It sold off a multimillion-dollar portfolio of private student loans, a sale that the Consumer Financial Protection Bureau alleged violated both the Dodd-Frank Act and the Fair Debt Collections Act. The CFPB is currently investigating Corinthian, which is also being sued in several states and is facing a criminal probe by federal prosecutors.

Kent Jenkins, Corinthian's spokesman, did not immediately respond to an after-hours request for comment on the lawsuit.

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