Tuesday, September 24, 2019

University of Wisconsin Oshkosh Foundation emerges intact from years of bankruptcy, financial turmoil

Photo by Miles Maguire
The UW Oshkosh Foundation operates from the newly renamed Culver Family Welcome Center.
By Miles Maguire
Three years after a flawed investigative report that threw its financial condition into question, the University of Wisconsin Oshkosh Foundation has emerged intact from Chapter 11 bankruptcy, with close to $20 million in assets and the financial capacity to fund hundreds of thousands of dollars in student scholarships

In an order dated Sept. 17, Chief U.S. Bankruptcy Judge for the Eastern District of Wisconsin G. Michael Halfenger officially closed the case, saying that the foundation’s “plan has been substantially consummated.”

“It’s been a long three years, but finally the outcome is favorable,” said Tim Mulloy, a retired insurance executive and UW Oshkosh alumnus who serves as chair of the foundation. “We come out of this with no debt and a clean balance sheet with about $28 million in assets,” he said. “In the last few months, we’ve had almost $3 million come in.”

Although the foundation was in Chapter 11 bankruptcy for only two years, Mulloy dates the organization’s problems to Aug. 10, 2016. That’s when Michael M. Grebe, chair of the UW System Regents Audit Committee, and Andrew J. Leavitt, chancellor of UW Oshkosh, received an investigative report they had commissioned from retired Judge Patrick J. Fiedler.

Fiedler’s report, which later became the basis for legal actions against two former UW Oshkosh administrators, contained a glaring error. “The starting point for this investigation is Article VIII, Section 3, of the Wisconsin Constitution,” Fiedler wrote, which “prohibits UW Oshkosh from guaranteeing any debts incurred by the UW Oshkosh Foundation.”

Fiedler was wrong on this point, as two judges, one in Dane County Circuit Court and the other in the federal bankruptcy system, later ruled. But the idea that the university-foundation transactions were illegal from the start, rather than just ill-advised or untimely, became central to a narrative that was pushed by the University of Wisconsin System and later repeated by news organizations across the state.

Fiedler declined to comment for this article.

The foundation has deep roots in the Oshkosh community, and its board has included some of the university’s strongest supporters, including Craig Culver, the co-founder of the Culver’s restaurant chain; Robert Keller, chairman of J.J. Keller & Associates; Dave Omachinski, former chairman of Anchor BanCorp Wisconsin; and Beth Wyman, a local entrepreneur and education activist who owns The Waters together with her husband, Bill, the former Oshkosh B’gosh executive who now heads the Oshkosh Area Community Foundation.

The group’s board said that it was forced to seek bankruptcy protection in August 2017 because of “a policy flip flop and ill-advised political gamesmanship” by the UW System Board of Regents.

At the time the foundation was struggling with several underperforming real estate estate investments that had required infusions of cash from the university. The foundation thought that it had a deal with the UW System to work its way out of its dilemma, but this agreement fell apart under pressure from legislative leaders, the foundation said.

After two adverse legal rulings, the UW System asked to meet with foundation officials late last year to work out a compromise solution. Earlier estimates that taxpayers could be on the hook for $15 million proved inaccurate as the UW System announced that it would pay less than half that amount to settle the matter. Even this cash payout was offset by the acquisition of a biodigester and a conference center worth millions of dollars.

“No donor dollars were used during this,” Mulloy said. “We continued to honor and pay all scholarships that were presented.” The foundation has just finished approving its latest round of disbursements, worth about $700,000, he said.

The foundation board is now turning its attention to a planned merger with a second university charitable arm, the Titan Alumni Foundation, which was launched about a year ago. “We are in concurrence on most things at a high level,” Mulloy said.

Some operating issues and the composition of the board for the merged organization are still to be worked out, he said.

The end of the bankruptcy case “is another important step in the renewal of our partnership,” said Oshkosh Chancellor Leavitt.

“We are grateful for the dedicated alumni, staff and volunteers of the UW Oshkosh Foundation and the Titan Alumni Foundation who continue to work closely together to chart the way forward and strengthen UWO," Leavitt said.

No comments:

Post a Comment