A US bankruptcy court in Delaware approved a liquidation plan for Corinthian Colleges Inc. that included a potential win for former students of the for-profit college chain, The Chronicle of Higher Education reported last week.

The court agreed to allow the Consumer Financial Protection Bureau and attorneys general from California, Massachusetts, and Wisconsin the ability to pursue legal action against the Corinthian.

That allowance is important for student borrowers as they would have the right stop repaying their loans if Corinthian was liable to a “legal course of action,” according to Anne Richardson, a lawyer representing the interests of students in the bankruptcy, who spoke with the Chronicle.

The US bankruptcy court’s decision could potentially benefit the largest group of student borrowers associated with Corinthian’s closing, and could mean that billions of dollars in federal student loans may never be repaid to the ED.

Student borrowers have been fighting for their rights through the bankruptcy proceedings since Corinthian closed.

In May, students enlisted the help of attorneys from the
Public Counsel Law Center, Robins Kaplan LLP, and Strumwasser & Woocher LLP
to make sure that their voices are heard during the upcoming bankruptcy proceedings.

The US Trustees Office — an agency of the US Department of Justice — granted the formation of a committee that will represent the students through the bankruptcy process. Attorneys representing the student group say this is truly a unique situation.

They have also been been pursuing full discharges of their loans through the ED which agreed to provide debt relief to a “group” of Corinthian students — those who attended a now-defunct Corinthian college after June 20, 2014.

Students who attended before that date are also able to apply for relief using the borrowers defence to repayment claim, though the ED has the ability to decide on a case-by-case basis which students deserve relief.

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