After losing legally required oversight, TiZA officials held out only a slim hope of keeping the charter school open.
A day after state officials e-mailed him shutdown instructions, the director of Tarek ibn Ziyad Academy (TiZA) advised parents to find new schools for their children while holding out hope that, "by some miracle," the charter school can stay open.
Standing beneath a basketball hoop Friday evening, Asad Zaman faced a crowd of more than 100 parents in the gym of the school's Inver Grove Heights campus. Mothers and fathers sat apart on either side of an aisle, at this meeting of a school where the vast majority of families are Muslim.
"I have to tell you, most likely the school will not survive," Zaman said, estimating that TiZA has a 10 percent chance of staying open.
In the eyes of the state, it has already ceased to exist as a public school. Left without legally required oversight when a new state law took effect Friday, the school has been told that it will no longer receive state aid.
Summer school will not resume Tuesday, Zaman said, but school officials are considering a challenge to the state Education Department in the Minnesota Court of Appeals.
And after two adverse rulings from a judge and the state since Wednesday evening, TiZA already has taken a highly unusual step by filing for bankruptcy protection.
"Wow. That's unusual," said Sandro Lanni, founder of the Charter School Management Corp., when told of TiZA's filing. In a decade of providing business services to more than 100 charter schools -- none in Minnesota -- the California-based company has seen a few close, but "I've never heard of one doing bankruptcy," Lanni said.
Neither has George Singer, a Minneapolis attorney with 18 years of experience in bankruptcy law. "It's rare," he said.
TiZA, which is a nonprofit corporation as well as a public school, listed just over $84,000 in liabilities in its bankruptcy petition. It also listed unknown and disputed amounts sought by three adversaries in a contentious lawsuit over claims that the school has promoted religion.
Key among them: The American Civil Liberties Union of Minnesota, which sued in 2009.
The Education Department and the school's longtime authorizer, Islamic Relief USA, also were listed along with half a dozen other creditors.
The state and Islamic Relief, both of which were initially named in the ACLU lawsuit, are seeking compensation of more than $1.6 million for legal costs.
The bankruptcy petition said the school had no assets, but Zaman said that figure will be amended.
"The school does have a bank account," Zaman said Friday, explaining that the school had been in a rush to file its petition.
In the petition, the school reported receiving about $4.4 million in state and federal funding for 2010-11.
All charter schools need an authorizer to stay open, but Islamic Relief became ineligible as an overseer when the new law took effect. The law forbids out-of-state authorizers.
TiZA had tried to obtain new oversight, but the state denied a request for the school to switch to a new authorizer late Wednesday evening.
Hours later, U.S. District Judge Donovan Frank declined to issue an order that would have allowed the school to stay open as it challenged the state law in federal court. The school then withdrew the suit, which it had filed last month.
On Friday night one father wondered whether parents might found a new charter school. And Zaman said a St. Paul charter school, Higher Ground Academy, has broached the topic of trying to open a new campus in a building that TiZA now occupies.
Asked whether the school's bankruptcy filing is a last-ditch effort to stay open, Zaman said, "We believe we have a right to continue business, and we will let the judge sort it out."
Businesses typically try to reorganize in Chapter 11 proceedings, Singer said. For debtors, one key benefit of a bankruptcy filing is that it freezes adverse actions such as lawsuits and foreclosures until a judge decides which claims should proceed, he said.
State aid is crucial for the school's survival; the next payment had been set for July 15.
Arguing that the payments should continue during bankruptcy "is one of the things [TiZA's bankruptcy attorney] is considering," Zaman said.
Sarah Lemagie • 952-882-9016