Will Whittle be around next year?

[Anonymous]

"We also shared, however, that we did receive very positive news and reaffirmation of support and capital commitment from the other two investors as well"

What is the source of this information? From the investors, or from school administration?

[Anonymous]

My question is: if teachers, cleaning, security and everyone else is getting NOT paid… Where did the tuition money go???

[Anonymous]

Anonymous wrote:This is the update we received tonight from Chris!


On Sunday morning, many of us met for a progress report on the status of the capital transaction. We advised that one of the three parties, Cottonwood, had chosen not to go forward and that we had to replace them. We also shared, however, that we did receive very positive news and reaffirmation of support and capital commitment from the other two investors as well. Together, their proposed capital represents 70% of the transaction. So, while again we are presented with a financing challenge, we have terrific partners who believe as we do in the school’s future and would like to be part of our vision and organization moving forward.

Since our Zoom meetings on Sunday morning, there has been a tremendous response from parents, positive reactions from our already committed investors, and a great deal of activity and progress toward two primary objectives:


Raise immediate bridge capital to assist us during the delay of closing.
Identify and secure the replacement Investor that will ensure the long-term financial viability of our DC campus.


Our status as of 5:00 PM today:

Since our calls with you on Sunday morning, we have on multiple occasions reconfirmed the support of our other investors. They have not been impacted by the Cottonwood withdrawal. In fact, it seems the reverse is true, and Cottonwood’s exit has brought the other parties closer together. We are hopeful one of the two may step up and “fill the gap.”
A group of families very skilled in capital matters have spontaneously formed to assist in the prompt replacement of Cottonwood. They have met several times already and have communicated their tremendous support of the school to our two key investors.
Proposals for bridge funds have been made to two investors for bridge finance which will provide for our needs until the larger deal closes. We expect their responses within the next 24 hours and perhaps as early as this evening. Also note that we have been able to provide collateral for the bridge, so this is very helpful.
As you know, one of the debt holders of our landlord has filed a foreclosure action calling for a sale of the building on March 24. This action is not against us/about us but has the very positive impact of accelerating and simplifying the larger transaction.

Again, I will provide another report in 24 hours.

Thank you for sharing this! Classic Whittle - lots of vague assurances and visions of funds to come and yet nothing tangible or concrete... What comes through clearly is the desperation and desire to get his hands on a few dollars to make payroll and keep the mirage alive for just a bit longer...

[Anonymous]

I know this sounds sarcastic, but it’s literally the same architecture as the “Nigerian Prince” scam. CW readily gives the name of the firm that is NOT investing, but does not identify by name the syndicate behind the 70%. In a normal scenario, an investor would see a commitment letter from the committed money. Here, he’s asking parents to put forth the remaining 30%. But guess what…there is no 70% but the implication of such makes the “30%” easier to raise.

It’s the same as saying that a Prince died and his $20,000,000 is available but that the heir needs $20,000 to deal with expenses. In this case, of course, there is no $20M and the $20K is the scam.

Cottonwood Equity Investments is a tiny “opportunistic real estate investor” with no website, no portfolio and no info (but apparently enough intelligence to walk away from this).

Sure CW can provide the commitment letter from the 70% lender / investor?

[Anonymous]

On October 23, 2019, the Post quoted Whittle as saying he'd "raised more than $900 million in direct investments and development costs borne by the real estate firms that will build and own his campuses."

That plus the tuitions is a lot of money to breeze through in less than two and a half years -- while ending up with only one campus (of a projected three to four) and a faculty whose salaries he can't pay.

Jonathan Knee describes the story of one of his early projects as leaving a "trail of unhappy partners, tales of profligate corporate spending and personal excess, accounting irregularities, exaggerated claims, and charges of self-dealing, all culminating in financial collapse."

Hard to imagine this is much different, given the apparent outcomes here.

[Anonymous]

Whittle facts
- $750 million (a number he claimed in multiple interviews) of investor capital vaporized
- Company facing multiple lawsuits and existing judgments
- Landlord facing foreclosure due to Whittle non payment of rent
- Faculty & staff careers and livelihoods damaged
- Student exodus underway

Whittle fiction
- Investors are dying to fund long term capital and support his vision (what's the bet they've never seen a balance sheet or income statement from the school?)
- Parents and staff and students are solidly behind him
- The foreclosure has nothing to do with him and is actually a big positive
- All is well

Elizabeth Holmes stands aside in awe and lets Chris take center stage

[Anonymous]

Anonymous wrote:I know this sounds sarcastic, but it’s literally the same architecture as the “Nigerian Prince” scam. CW readily gives the name of the firm that is NOT investing, but does not identify by name the syndicate behind the 70%. In a normal scenario, an investor would see a commitment letter from the committed money. Here, he’s asking parents to put forth the remaining 30%. But guess what…there is no 70% but the implication of such makes the “30%” easier to raise.

It’s the same as saying that a Prince died and his $20,000,000 is available but that the heir needs $20,000 to deal with expenses. In this case, of course, there is no $20M and the $20K is the scam.

Cottonwood Equity Investments is a tiny “opportunistic real estate investor” with no website, no portfolio and no info (but apparently enough intelligence to walk away from this).

Sure CW can provide the commitment letter from the 70% lender / investor?

+1,000,000

[Anonymous]

Whittle = the Tinder Swindler of education

[Anonymous]

Anonymous wrote:Whittle = the Tinder Swindler of education

That’s a good one!

[Anonymous]

Cottonwood Equity Investment seems to be five 30-year-olds in Salt Lake City. I wouldn't be surprised if they said they were interested as a lark. Why not? Might as well get a free trip to DC and a stay at the Ritz-Carlton Georgetown on the crazy guy's dime.

They must have been baffled when he called them, as he searched for $250 million....Imagine how many investors he sifted through before he found them.

[Anonymous]

Elements of Fraud
(1) that a representation made by the defendant was false;
(2) that either its falsity was known to the defendant or the misrepresentation was made with such reckless indifference to the truth to impute knowledge to the defendant;
(3) that the misrepresentation was made for the purpose of defrauding the plaintiff;
(4) that the plaintiff not only relied upon the misrepresentation but had the right to rely upon it with full belief of its truth, and that the plaintiff would not have done the thing from which the damage resulted if it had not been made; and
(5) that the plaintiff suffered damage directly resulting from the misrepresentation.

[Anonymous]

Or is it Cottonwood Capital?
https://cottonwood-capital.com/

[Anonymous]

Aha... the Cottonwood team's real estate focus helps make sense of why Whittle is gloating over the foreclosure proceedings - he's angling for a real estate investor to come in, buy the building in the foreclosure auction and give him a sweetheart deal. But real estate investors like strong tenants who have the ability to pay rent. And that's where the Whittle proposition collapses. No one is giving him a dime - some well meaning but misguided families might prop this zombie up a bit longer but serious investors will make like Cottonwood and run for the hills

[Anonymous]

I’m the poster with the rant about the Nigerian Prince fraud.

I saw that link but it definitely doesn’t meet the investment thesis of “that” Cottonwood. They don’t seem to be interested in distressed asset investing, nothing about education or real estate (or Ponzi scheme) investments.

Doesn’t seem likely but I could be wrong.

[Anonymous]

One last point as a business deal geek…a “restructuring” or “recapitalization” like this would almost certain be led by a niche investment bank, focused on distressed asset liquidity. The probability of a legitimate process being run by the discredited, failed CEO of the entity that was looking to do a debt recap is pretty damn close to zero.