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Closing administrator: Teach Las Vegas and Eagle wind-down faces payroll, creditor issues; final unsecured payments expected in June
Summary
The board heard an update on the wind-down of Teach Las Vegas and Eagle Charter Schools of Nevada: incomplete records required reconstruction of payroll and W-2s, priority-creditor questions were resolved, and limited funds remain to pay a small percentage to general unsecured creditors next month.
Josh Kern, the closing administrator for Teach Las Vegas and Eagle Charter Schools of Nevada, told the State Public Charter School Authority on May 30 that both closures have been delayed by incomplete and inaccurate financial records and complex creditor-priority questions.
Kern said staff discovered systemic payroll errors while reconstructing records for Eagle Charter Schools: some former employees had no wages reported on earlier W-2s, others had incorrect wage entries and incorrect withholdings, and some employees were improperly marked exempt from Social Security and Medicare. Kern said his team recalculated wages and withholdings for the majority of the schools’ employees to prepare corrected W-2 forms so former employees could file federal tax returns. Corrected W-2s were issued in February, Kern said.
A separate, major issue was correctly identifying secured and priority creditors. Kern said it was recently resolved that the Nevada Department of Education (NDE) will be treated as a general unsecured creditor for Eagle rather than having priority status; that resolution mattered because if NDE’s $800,000 overpayment had been treated as a priority claim it could have consumed all available funds for general unsecured creditors at Eagle. With the priority-creditor question resolved, Kern said both Teach and Eagle will have “some remaining funds” to pay general unsecured creditors and he expected those payments to be made in June. He said he plans to deliver a final wind-down audit and compliance report to SPCSA by September that will document whether any liabilities remain.
Kern told the board that the closings remain "complex and dynamic," acknowledged the time burden and apologized for the length of the process, and said his final report will include recommendations to streamline future closures. Board members asked about tax-filing implications for former employees; Kern said corrected W-2s were issued before the April filing deadline and he believed employees had the correct information in time to file.
Why it matters: The wind-downs affect former employees, vendors and creditors, and resolving the order of creditor payments is a legal and practical prerequisite before any distributions can be made to unsecured creditors.
