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Parent company of ITT Tech ends operations

ITT Educational Services Inc. will end its operations after sanctions by the U.S. Department of Education.

By Ed Adamczyk
Parent company of ITT Tech ends operations
A week after closing its ITT Technical Institute campuses, parent company ITT Educational Services announced it would end operations Friday. Photo courtesy of ITT Technical Institute

CARMEL , Ind., Sept. 15 (UPI) -- The parent company of ITT Technical Institute will end all operations Friday, it announced in a regulatory filing.

ITT Educational Services Inc., based in Carmel, Ind., closed all its 136 ITT Technical Institute campuses last week after the U.S. Department of Education stopped the schools from accepting students who rely on federal financial aid. In 2015, ITT received 79 percent of its cash receipts from federal student loan programs.

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The parent company said Wednesday that on Sept. 8 it was informed by its lender, Cerberus Business Finance LLC, that it was in default because of an Education Department requirement ITT increase its surety position by $152.9 million, an increase from $94.4 million. The surety was a pledge that Cerberus would pay ITT's obligations.

Cerberus said in a statement it required immediate payment of the entire amount of its loan of "approximately $34.5 million, together with all fees, costs and expenses and all other obligations payable under the financing agreement." It added it "provided notice to the company's financial institutions that the lender was exercising its control over the company's bank accounts and instructed the financial institutions to transfer all of the company's cash balances to accounts controlled by the lender."

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The 50-year-old company said in its Securities and Exchange Commission filing that "The cumulative effects of the events over the last several weeks have led the company to plan to cease all operations as of September 16, 2016."

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