In Rare Fight, Johnson & Wales Battles to Keep Tuition Money

Johnson & Wales University is fighting a bankruptcy lawsuit that disputes whether parents who paid tuition for their children before filing for bankruptcy should have used that money to pay down their own growing debts.

Tuition-recovery lawsuits like this one prompted Rep. Chris Collins (R. N.Y) to introduce a bill that would block bankruptcy trustees from filing lawsuits against universities and college students. Bankruptcy practitioners are already pointing out the laws flaws and discrepancies, including a state law that enables the same lawsuit.

"This leaves a gaping hole in the protections that [the law] seeks to provide," said bankruptcy attorney Lynne Xerras, who recently analyzed the bill in a legal paper.

READ: In Rare Fight, Johnson & Wales Battles to Keep Tuition Money