2U Inc. TWOU, a prominent online education company, has filed for Chapter 11 bankruptcy protection. The Maryland-based firm has been grappling with mounting debt and intensified competition.
What Happened: On Thursday, 2U, a key player in the online education sector, announced its decision to file for Chapter 11 bankruptcy protection. The company, which has been in operation since 2008, has partnered with 260 colleges and universities, including prestigious institutions like Yale, UC-Berkeley, and Morehouse College.
2U has been facing financial challenges due to stiff competition and a heavily leveraged balance sheet. This has led to multiple rounds of layoffs since 2022. To address these issues, the company has struck a deal with its lenders and noteholders, which will cut its debt load by 50% to $459 million, extend the maturity of its loans, and provide $110 million in new capital.
Despite the bankruptcy filing, 2U has assured that the restructuring process will not disrupt services for students or colleges. The company is expected to emerge from the bankruptcy proceedings as a privately held entity, backed by its current lenders and noteholders.
“Today marks an important milestone for 2U. New capital and a healthier balance sheet will enable us to continue our long-standing mission,” said Paul Lalljie, Chief Executive Officer of 2U.
Why It Matters: The bankruptcy filing by 2U comes at a time when corporate bankruptcies in the U.S. are on the rise. A recent report from S&P Global revealed that a higher-for-longer interest rate environment has led to a surge in corporate bankruptcies, raising concerns about the U.S. economy.
Earlier in the year, Genesis Global, a subsidiary of Digital Currency Group, also filed for bankruptcy and agreed to a $21 million settlement with the Securities and Exchange Commission over a contentious lending program. The bankruptcy filing by 2U adds to the growing list of companies facing financial challenges in the current economic climate.
Price Action: 2U stock closed at $1.51 on Thursday, down 63.35% for the day. In after-hours trading, the stock further declined 1.32%. Year to date, the stock has fallen 95.70%, according to data from Benzinga Pro.
Read Next:
Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
