McNally Smith files for bankruptcy | WVIA

McNally Smith files for bankruptcy

Last Updated by Peter Cox on


Dateline: St. Paul

Updated: 8:50 p.m. | Posted: 1:43 p.m.

McNally Smith College of Music filed for bankruptcy in federal court Thursday and is seeking to liquidate.

The St. Paul-based music school closed abruptly in December, giving faculty, staff and students just days notice, saying financial pressures led to the closing.

The filing seems to indicate the 32-year-old school has more assets than liabilities.

McNally's liabilities range between $1 million and $10 million, according to the 112-page Chapter 7 filing in U.S. Bankruptcy Court in St. Paul. Assets total between $10 million and $50 million.

The assets include the school's building at 19 East Exchange Street, assessed by Ramsey county in 2017 at nearly $14 million. Public records indicate the school owes around $3 million on a mortgage.

• Previously: McNally Smith came within 'hair's breadth' of reopening

The number of creditors that are owed money are between 200 and 999, according to the filing. The filing also lists the names of creditors, including former faculty and staff who were not paid for their last weeks of work, as well as some students.

Among the creditors is Ronald Pfuhl's daughter, Nichole. Last October, McNally Smith told Pfuhl he would get a discount on tuition if he paid before the second semester started.

"We had the money that we'd been saving since before she was born, so we took that opportunity to save a little bit on tuition and paid $12,000," Pfuhl said.

"We don't have any information about [refunds] since nobody answers the phones, emails aren't usually returned," he added.

Phil Kunkel, a bankruptcy attorney with Gray Plant Mooty who is not involved in the case, said a trustee will be appointed to take control of all the assets of the school, gather them together, and then liquidate them for the benefit of creditors.

"The other priority that can't be overlooked is the expenses of liquidating the assets and administering the case will get paid ahead of the employees and other creditors as well," Kunkel said.

McNally Smith closed after a two-year effort to convert from a for-profit into a nonprofit. That would have allowed students and the institution access to more federal assistance and permitted the school to seek charitable contributions.

Enrollment had fallen by 30 percent between 2012 and
listenlive_fulllength.jpg cove_spacer.png
Now Playing on WVIA-FM



How Happy Is The Country With The Biggest Gains In Happiness?

Togo ranked last in 2015's World Happiness Report. This year, it moved up 17 spots — the most improved country in...

Shooting At Maryland High School, At Least 2 Victims Injured

There has been a shooting at a high school in St. Mary's County, Md.. Great Mills High School is being evacuated and...

Top Stories: New Texas Blast; U.K. Wants Search Warrant For Data Mining Firm

Also: Saudi Arabia's controversial Crown Prince meets President Trump today; Congress must pass a spending bill or...

healthybites_sidebar2.png reserve3.png