Supreme battle: Are bondholders behind Sweet Briar’s ride to the state’s top court?

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Amherst County Attorney Ellen Bowyer led the legal charge to keep Sweet Briar College open, taking the case to the Supreme Court of Virginia June 4.
Photo: Christian Hommel Amherst County Attorney Ellen Bowyer led the legal charge to keep Sweet Briar College open, taking the case to the Supreme Court of Virginia June 4. Photo: Christian Hommel

By now, practically everyone in academic circles has heard the official explanation—declining enrollment and revenue—for why the board of directors voted to close Sweet Briar College. Harder to understand is the follow-up question, particularly now that an alumni group claims to have raised at least $16 million: Why would any board endure three lawsuits to ensure the death of a 114-year-old women’s college?

Last Thursday, June 4, the conflict reached the Virginia Supreme Court in Richmond. There, before an over-capacity pink- and green-clad crowd, a lawyer for the case brought by Amherst County Attorney Ellen Bowyer sought to convince the panel of justices to issue an injunction to keep the college open and to run it with a special fiduciary. In the 32-minute hearing, the justices reserved their toughest questions for Woody Fowler, the lawyer representing the board.

“Why,” asked a justice, “are you contesting this so strongly?”

Denying that his side was fighting to close the school, Fowler said this was a battle for the right of the board to make its own decisions.

“You can’t step in and say, ‘Corporation, we didn’t like what you did, so we’re gonna flip it over.’”

“I’m sorry,” replied a justice, “but that sounds like an overstatement. This is just a preliminary injunction. It’s issued all the time by courts, and it freezes the situation until the court can give it a really hard and deliberative look.”

That wasn’t the last time the state’s top jurists would spar with Fowler, who alleged that an injunction forcing Sweet Briar to remain open would hasten its demise.

“You’re being asked,” said Fowler, “to allow for an orderly wind-down, or you’re being asked to allow a crash-and-burn.”

Another justice quickly responded that Fowler omitted a third option: adhering to the 1901 will by the late Indiana Fletcher Williams and keeping a women’s college alive in perpetuity.

The stings against Fowler continued when one justice pointed out that “three very well-respected professors” noted that the college could be both a corporation and a trust.

“I know you’re resting on the declaration that it is a corporation,” the justice told Fowler. “Suppose we disagree with you, and it is a trust. How can you cease the operations of the school when it is to be operated in perpetuity?”

Fowler tried to pose a question back to the bench, but he was quickly halted.

“Let’s get this straight,” said the interrupting jurist. “I ask the questions.”

So back to a big question. Why, when school-savers claim to have pledged over $16 million, does the board not simply walk away?

“Nobody understands why the hell they are doing this,” says Jay Orsi. “Ego and pride is about all I can hang it on at this point.”

Married to a Sweet Briar alum, Orsi is an Arkansas business owner whose master’s degree in business includes a concentration in finance. Last month on his blog, unsolicited.guru, he revealed how Sweet Briar President James F. Jones Jr. appears to have overstated the level of deferred maintenance on the campus by a factor of seven.

And in a sea of conspiracy theories, Orsi is the person who provides the most evidence-based explanation for the board’s decision—and its timing. By filing a Freedom of Information Act request with the issuing agency, the Amherst Industrial Development Authority, Orsi discovered that Sweet Briar’s most recent set of bonds carry certain rules, called covenants, regarding cash reserves, that the college may be on the verge of breaking.

In Thursday’s Supreme Court hearing, board attorney Fowler warned that the crash-and-burn might happen after bondholders quickly intervene if the college tries to remain open. Orsi, however, suggests a cleaner exit strategy. Given the millions pledged by would- be college-savers and that nine years have elapsed since the college’s last capital campaign (raising $110 million), Orsi believes supporters would gladly spend the $9 million it would take to pay off those bonds.

Shortly after the board’s March 3 closing announcement, D.C.-based business author Megan McArdle lauded the board’s decisiveness. Now, she wonders if they’ve been hardheaded.

“It’s like gamblers who double down,” says McArdle. “They get invested in being right.”

One person eager to help plan Sweet Briar 2.0 is Anna Rij, who was among the crowd at the Supreme Court hearing. A 2010 Sweet Briar graduate now working as a 4-H executive in Caroline County, Rij envisions the launch of an agriculture-technical program created with the help of Virginia Tech, the United States Department of Agriculture and the Virginia Cooperative Extension.

The program would use some of the 3,250-acre campus to feed the students while providing practical instruction and research opportunities.

“If we could incorporate agriculture into the campus, says Rij, “it would be a sustainable thing.”

But first, Rij and others need a win from the state’s high court.

As this story was going to press, the court issued a ruling in Amherst County Attorney Ellen Bowyer’s favor: a college can be both a trust and a corporation. With the case going back to the Amherst County Circuit Court, that’s welcome news for Save Sweet Briar suppporters because Judge James Updike has already issued two temporary injunctions and has indicated that he will take no actions to further the closing of the college.