Posted by: Louis Lavelle on April 1, 2010
A few years ago, flush with cash, the consulting company BearingPoint did something a lot of companies do when they’re flush with cash: it gave some of it away—$8.1 million to the Yale School of Management (Yale Full-Time MBA Profile) to be exact.
Flash forward to 2010. BearingPoint is out of business, and it’s being sold off in parts to rivals Deloitte and PricewaterhouseCoopers. Now, as Bloomberg reports, BearingPoint’s liquidation trustee wants the money back.
The trustee, John DeGroote Services LLC, wants Yale to return $2.1 million it received in 2008 and 2009 as part of an education collaboration agreement, as well as $6 million the university got in 2007 and 2008 as part of a commitment agreement, under which BearingPoint was to give $30 million over seven years in exchange for “naming opportunities,” according to a March 12 filing in U.S. Bankruptcy Court in New York.
But Yale is having none of it “Yale believes that the complaint is not meritorious and intends to oppose the trustee’s efforts to undo BearingPoint’s performance of its commitments to Yale,” the university said in an e-mailed statement.
The trustee maintains that BearingPoint derived “no benefit to its business or assets” from the agreements, but Yale says it held up its end of the bargain, adding that the BearingPoint payments stopped after the company filed for bankruptcy protection.
The demand for the cash comes at a tough time for Yale, whose endowment dropped nearly 24% during the economic meltdown last year. The university now plans a series of painful cutbacks—including layoffs, a salary freeze, even turning down the thermostats—to close a $150 million budget gap.
There’s no telling how far they’ll have to turn down the thermostats if the bankruptcy trustee wins this fight.