ITT Tech Bankruptcy Case Is Mayhem For All Involved

ITT TechThe bankruptcy trustee for ITT Tech has asked a federal judge to freeze all freedom of information act (FOIA) requests about ITT, slap a hold on all federal and state lawsuits against the company and halt the SEC's pending civil fraud charges against two ITT executives.

ITT Tech Bankruptcy

In September 2016, ITT Educational Services Inc. filed for Chapter 7 bankruptcy, following the announcement that it was shutting down over 130 campuses and ceasing all business functions. ITT Tech listed its assets and liabilities at between $100 million and $500 million.

ITT’s closure displaced over 35,000 students and 8,000 employees. ITT blamed its failure on “overzealous government regulations.” ITT’s accreditation was under review and the U.S. Department of Education recently issued several sanctions against the school, including a ban on enrolling new students who rely upon federal financial aid.

However, critics of ITT say that the company created its own problems. ITT faced fraud charges from the Securities and Exchange Commission and is under investigation or being sued by approximately 20 state attorneys general. Additionally, government agencies are investigating the company’s alleged failure to disclose bad loans to investors, inflated job placement numbers, and aggressive recruiting tactics. 

ITT Tech had been in operation for approximately 50 years, operating over 130 campuses around the country. It offered on-campus and online classes in business, nursing, health sciences, electronics and information technology. ITT Tech operated as a for-profit school. Last year, it generated $850 million in revenue. About $580 million of that revenue came from federal student loans.

Trustee’s Requests

Deborah Caruso was appointed as trustee of the ITT Tech bankruptcy. Caruso has asked a federal judge to freeze all Freedom of Information Act (FOIA) requests about ITT and place a hold on all federal and state lawsuits against the company. She argues that a court order is needed to block public disclosure of information about ITT Tech because “such requests would impermissibly threaten the property of the estate.”

Caruso is requesting that a federal judge block all pending lawsuits against ITT Tech. This includes suits filed by Massachusetts and New Mexico, both of which have accused ITT Tech of violating consumer protection laws. 

These states have responded that their cases should be allowed to proceed. They argue that these cases could help build up the body of evidence of fraud against the company that former students could use to have the federal Education Department forgive their loans.

Jillian Fennimore, spokeswoman for Massachusetts Attorney General Maura Healy, told Morning Education, “Our case against ITT is necessary to help former students access the relief they deserve from unaffordable loans.” Similarly, James Hallinan, spokesman for New Mexico Attorney General Hector Balderas, said their office is resisting the trustee’s “efforts to seek a long-term stay of our litigation because we want to continue to move our case forward and seek relief for New Mexico students who were harmed by ITT's practices.”


The Indiana House of Representatives is moving a bill forward to help students impacted by the abrupt closure of for-profit schools like ITT Tech.

Photo Credit: ITT Tech TV by Forsaken Fotos. (CC BY 2.0)

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