The News Desk is a collection of news, notes and breaking items affecting the Fredericksburg community.
State Fair scholarships in jeopardy?
By Portsia Smith
More than $1 million in schol arship money that has been awarded to high-school stu dents by the State Fair of Virginia could be in jeopardy, fair officials said.
SFVA President Curry Roberts mailed out about 500 letters to parents recently explaining how the non-profit’s Chapter 11 bankruptcy filing could affect money that has already been promised to their children.
“In spite of very clear language that segregated the State Fair Scholarship Fund totaling over $1 million in 2007 from all other assets pledged as collateral for State Fair of Virginia loans, the lender group is now trying to seize those funds, including the funds already earned by your child or children,” he wrote in the letter.
Roberts said the Scholarship Fund is restricted money kept in a separate account that was never intended to be used as collateral in their bankruptcy negotiations.
SFVA filed for Chapter 11 bankruptcy protection on Dec. 1 after accumulating a large amount of debt.
Filing for Chapter 11 means that SFVA will get some time to reorganize its business and restructure its debt without requiring unanimous agree ment among the 15 lenders.
Chapter 11 also means SFVA will not have to liqui date its assets, and will continue business operations through the process.
Roberts said that SFVA was unable to reach an “agreeable solution” with its lenders— something he said it had been trying to do for some time.
As part of the negotiations, Roberts said the lenders forced them to lay off four employees five days before Christmas. He said the attor neys were not in favor of those employees receiving two weeks’ severance pay, but that the judge disagreed.
He said that persistence by the lenders is what makes him believe the scholarship money is at risk.
Attorneys Michael Mueller and Christine Myatt, who represent the SFVA’s largest lender, ArborOne, could not be reached for comment.
Another lender, Farm Credit of the Virginias ,put out a statement Friday morn ing on their Facebook page refuting the claim.
“It has come to our atten tion that State Fair of Virginia scholarship recipients re cently received a letter from the State Fair of Virginia indicating that Farm Credit of the Virginias and others were putting the scholarships at risk. This is inaccurate,” the statement said.
“No one knows at this point what the impact of that bankruptcy filing will be for the scholarship program, the scholarship winners or the many others to whom the State Fair has made promises. The bankruptcy process is in its earliest stages and will need to take its course.”
Since its inception in 1989, the State Fair of Virginia Scholarship Program has awarded 2,439 scholarships and has dedicated more thanover $ 1.8 million to youth educa tion, according to the fair’s website. Scholarship winners may use their scholarship earnings to attend any ac credited post-secondary ed ucational institution.
Eastern View High School student Elizabeth Nixon is counting on the $3,000 scholarship she won last year to study agriculture at Butler County Community College in Kansas.
Her mother, Kim, received one of the letters in the mail, and it has been a hot topic in her household.
“I was very shocked be cause we were told the funds would be safe and available,” she said last night. “Now, I think there’s just a lot of confusion.”
The next court appearance for the SFVA will be Feb. 14 for a status conference hear ing at the U.S. Bankruptcy Court in Richmond.
Despite its troubles, the SFVA does have an ally.
The Caroline County Board of Supervisors Chairman Wayne Acors sent a letter of support to fair officials this month, saying that the coun ty is behind them 100 per cent.
“Caroline County intends to take the steps necessary to ensure that the State Fair of Virginia Inc. will continue to utilize the Meadow Farm site for many years to come,” Acors wrote.
Portsia Smith: 540/374-5419 email@example.com