2008 Woodie Awards
Beta files for Chapter 11 bankruptcy
By: Andy Bruner
Issue date: 9/2/08 Section: News
House renovations done nearly a decade ago led DePauw's Beta Theta Pi fraternity chapter to file for chapter 11 bankruptcy on Aug. 18.
For the time being, the decision will not affect the fraternity house or members' ability to live there, Beta officials said.
"Really it's not going to have an effect on the day-to-day operations," said chapter president Greg Giometti, a junior.
Chapter 11 bankruptcy allows a debtor to reorganize with complete or partial relief from payments to creditors. That means if Beta's bankruptcy plan is approved by its creditor, none of the chapter's property would be liquidated.
Beta house corporation president Dave Krebs said via e-mail that the chapter's debt is to the international financial firm Lehman Brothers, which gave Beta a mortgage of about $1 million for house renovations several years ago.
Neither Krebs nor Giometti were certain of the renovation's timeframe, but Krebs said the loan was dated 1999.
Krebs said Beta and Lehman Brothers are in the process of agreeing to a financial reorganization plan for the fraternity.
"We have not submitted any plan at this time," Krebs said. "We are negotiating with the lender regarding terms including the amount, interest rate and amortization period."
While the reorganization should benefit Beta in the short-term, Krebs acknowledged a bankruptcy will make it harder for the chapter to get loans in the future.
"A bankruptcy always creates issues for future loans, but I do not see a need for additional loans any time soon," he said. "I am optimistic that we will be able to reach a solution with the lender. The bankruptcy filing levels the playing field again."
Giometti said the chapter's current situation is the result of decisions made years ago by different leadership.
"It was a different group of students, a different alumni board and a different housing corporation that did the initial renovations," Giometti said. "We're dealing with the fallout of that, and this is how we've decided to do it."
While Vice President of Student Life Cindy Babington said the issue is Beta's, not DePauw's, the University is involved in the situation because it has a stake in the Beta house for safety systems it paid to install.
Babington said the University is also confident the bankruptcy filing will not affect any students' living situations.
"For now and for the foreseeable future, I expect to have Betas living in their house," she said. "It doesn't benefit anybody-Betas, the bank, the University-to not have people living there and collecting rent."
Giometti agreed, saying the choice to declare chapter 11 bankruptcy allows the fraternity to continue bringing in money while reorganizing its debt.
"Rather than just pouring every bit of income the house gets into the mortgage, we're working on renegotiating the mortgage with the bank so we can put more of the money toward the house," he said.
For the time being, the decision will not affect the fraternity house or members' ability to live there, Beta officials said.
"Really it's not going to have an effect on the day-to-day operations," said chapter president Greg Giometti, a junior.
Chapter 11 bankruptcy allows a debtor to reorganize with complete or partial relief from payments to creditors. That means if Beta's bankruptcy plan is approved by its creditor, none of the chapter's property would be liquidated.
Beta house corporation president Dave Krebs said via e-mail that the chapter's debt is to the international financial firm Lehman Brothers, which gave Beta a mortgage of about $1 million for house renovations several years ago.
Neither Krebs nor Giometti were certain of the renovation's timeframe, but Krebs said the loan was dated 1999.
Krebs said Beta and Lehman Brothers are in the process of agreeing to a financial reorganization plan for the fraternity.
"We have not submitted any plan at this time," Krebs said. "We are negotiating with the lender regarding terms including the amount, interest rate and amortization period."
While the reorganization should benefit Beta in the short-term, Krebs acknowledged a bankruptcy will make it harder for the chapter to get loans in the future.
"A bankruptcy always creates issues for future loans, but I do not see a need for additional loans any time soon," he said. "I am optimistic that we will be able to reach a solution with the lender. The bankruptcy filing levels the playing field again."
Giometti said the chapter's current situation is the result of decisions made years ago by different leadership.
"It was a different group of students, a different alumni board and a different housing corporation that did the initial renovations," Giometti said. "We're dealing with the fallout of that, and this is how we've decided to do it."
While Vice President of Student Life Cindy Babington said the issue is Beta's, not DePauw's, the University is involved in the situation because it has a stake in the Beta house for safety systems it paid to install.
Babington said the University is also confident the bankruptcy filing will not affect any students' living situations.
"For now and for the foreseeable future, I expect to have Betas living in their house," she said. "It doesn't benefit anybody-Betas, the bank, the University-to not have people living there and collecting rent."
Giometti agreed, saying the choice to declare chapter 11 bankruptcy allows the fraternity to continue bringing in money while reorganizing its debt.
"Rather than just pouring every bit of income the house gets into the mortgage, we're working on renegotiating the mortgage with the bank so we can put more of the money toward the house," he said.
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