Rulings, Filings and Finances

There have probably been better fortnights for INTO University Partnerships (INTO) than the last two of July 2023.  Losing a decision in the court case against the University of South Florida (USF) and missing financial filing deadlines for both INTO University of East Anglia and the parent company are not calculated to bolster confidence or impress existing and potential partners.  Rumours of another round of redundancies and outsourcing also reflect the challenges facing the business.

Truth and Wisdom

Following a hearing on 27 June, Circuit Judge Darren D. Farfante has dismissed Count V of the Second Amended Complaint filed by INTO against Defendants Jennifer Condon, Karen Holbrook, Nic Trivunovich, and Ralph Wilcox.2  In simple terms, the judgement noted that “…sovereign immunity bars Count V of the Second Amended Complaint against the FC Directors as pled.”  The Plaintiffs, INTO USF, Inc., INTO USF LP, and INTO University Partnership Limited, “…subsequently advised the Court that they will not amend and dismissal of Count V of the Second Amended Complaint should be entered for purposes of appeal.”

While the plaintiffs could choose to re-engage on this point if the case ever goes to appeal the position is that after months of assertions that the USF Joint Venture Directors had “breached their fiduciary duties”,3 that particular strand of the matter is closed.  It is difficult to believe that the legal pursuit of individuals hasn’t left some scars on both sides and it may have put the issue of personal liability into the minds of university joint venture board directors elsewhere.  Rulings in one state may not be directly applicable to another but they may offer a sense of how closing a similar joint venture could play out elsewhere. 

Hard on the heels of the judgement USF moved to “..dismiss IUP’s Supplemental Pleading4 with prejudice.”5  This appeared to be substantially on the grounds that Sovereign Immunity also “..Bars Counts X, XI, XII, XIII and XIV”.  The filing also states that that “…opposing counsel (i.e. INTO’s counsel) has not requested that the undersigned stipulate to the filing of a second amended complaint” which seems to suggest the judge will now determine the outcome on these Counts.    

It may be that forthcoming discussions will lead towards a settlement of some sort with notification that a Mediation Conference has been scheduled for 29 September, 20236.  One might think that both organizations would be glad to see an end to such a public dispute.  As always, the author of this blog does not claim any legal expertise and advises readers to seek detailed information to form their own opinions9. 

History Man to Remains of the Day

The decline of INTO’s first joint venture at the University of East Anglia (UEA) is a saddening tale for anybody involved in the successful early days of the initiative.  The rhetoric was largely about the game-changing nature of long-term public-private partnerships but for those involved in the reality of international recruitment the immediate opportunity for increasing enrolments was clear.  INTO has removed the UEA case study from its corporate pages but the early days were genuinely transformational.

While the crisis at the University and the departure of its Vice-Chancellor has broader causes the situation has been exacerbated by a significant decline in the enrolment and financial fortunes of the joint venture.  The late filing, for the second year in a row, of the joint venture’s financial statement due on 31 July, 2023, means it is not possible to know whether enrolments fell even further in 2021/22 but the direction of travel has been downwards since 2015.  It is also likely that this has contributed to UEA’s declining revenue from international students.

It seems reasonable to believe that the late filing may be due to broader discussions about the future of the joint venture relationship.  New vice-chancellor, Prof David Maguire, is on record as saying that the immediate future is about “survival of the fittest” and it is difficult to see a compelling case for preserving the joint venture while cutting back on schools of study that have formed the institution’s history and sense of self.  At a time when reports say 400 positions – equivalent to 10 per cent of the workforce – have already been lost at UEA through redundancies, severance and resignations, the extent to which the university should continue to help prop up a loss-making commercial venture must be in question.

There may be an alternative argument that the joint venture brings opportunities for direct recruitment to help UEA out of its current problems.  Whether to stick or twist and whether it is wiser to be the history man6 or look with confidence towards the remains of the day7 is a very real choice.  Given the length of the joint venture contract originally signed and what appears to be a lack of performance it will be interesting to see if UEA would consider the USF route to resolution.

Patet omnibus veritas8

INTO’s financial accounts to July 2022 noted that its cash position during the year had declined from £20.5m to £9.4m year on year and that it had “revised EBITDA covenants agreed with its bankers to February 2024”.  It’s difficult to know what is going on under the surface but rumours of further cutbacks are circulating and it seems plausible that there is a squeeze to cut costs early in the financial year that began on 1 August 2023.  The urgency may be sharpened by developing views on enrolment numbers because, as with many education businesses, a significant portion of revenue will be baked in quite early in the year.

A previous blog suggested some of the issues that the incoming CEO, in February 2023, might want to consider.  The Executive Team has already been slimmed down a reduction in higher salaries is to be expected when the 2022/23 results are published.  On the other hand, expenditure on opening University Access Centres seems to be continuing, there is a new partnership to launch at Lancaster University, the recovery of pathway operations in the US looks patchy and there is the spectre of more stringent visa controls in the UK ahead of 2024 recruitment.

In the US, the recent addition of a recruitment only deal with Montclair State University makes little headway in the struggle to recover and compete after several years of joint-venture closures and the acceleration of direct recruitment partnerships by main competitor Shorelight.  In the UK, the partnership with Lancaster University brings a high tariff institution to the party but Study Group didn’t seem able to keep Lancaster happy so the pressure to perform is certain to be on. There does not seem to be any news of further progress in Australia. 

INTO must also be waiting with bated breath on the outcome of the Manchester Metropolitan University International Study Centre tender.  There is rarely a dull moment, which may be why they have been a bit too busy to file their Confirmation Statement to Companies House.  Or it could be that there is even bigger news to come.

NOTES

  1. Truth and Wisdom is the motto of the University of South Florida
  2. Final Order: 07/24/2023 02:59:36 PM Electronically Filed
  3. Filing # 167652717 E-Filed 02/27/2023 07:53:06 PM (point 137 and others)
  4. Filing # 175778804 E-Filed 06/21/2023 09:45:06 AM
  5. Filing # 178214351 E-Filed 07/25/2023 05:09:59 PM
  6. Filing # 179194479 E-Filed 08/08/2023 03:23:11 PM
  7. A small homage to Malcolm Bradbury, author of The History Man (1975), one of the most evocative novels about university campus life of the era, who became Professor of American Studies at the University of East Anglia in 1970 and launched the MA in Creative Writing course.  The course has been attended by several eminent authors including Kazuo Ishiguro who won the Booker Prize in 1989 for his book Remains of the Day and went on to be awarded the 2017 Nobel Prize for Literature.  My best wishes to all colleagues and friends still working hard to make UEA a success again.
  8. “Patet omnibus veritas” is the Latin version of Lancaster University’s motto.  It translates to Truth Lies Open to All.
  9. The background to the court case between INTO University Partnerships and the University of South Florida has been outline in several previous blogs. As before the terms INTO and University of South Florida are used as short forms for the range of corporate plaintiffs and defendants. Full details and all public documents reference in this blog can be found through https://hover.hillsclerk.com/html/case/caseSearch.html the Hillsborough County Clerk of Courts search facility. Insert 22 for the year, CA-Circuit Civil for the Court type and 006001 for the case number.

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