Naked City

The U.S. Bankruptcy Court approved a petition Monday that would allow the Texas Academy of Excellence to pay its teachers their February wages as part of the school's Chapter 11 proceedings. The East Austin charter school is trying to dig its way out of several hundred thousand dollars of debt – exactly how much is unclear, as the school's records are in what Assistant Attorney General Edith Stuart Phillips characterized during the proceedings as "considerable disarray."

But the TAE, which has an annual budget of about $1 million, owes money to the IRS, the Teacher's Retirement Fund, several vendors, and a past landlord who froze the school's bank accounts last month in an attempt to collect back rent. That freeze was what kept the teachers from being able to legitimately cash their January checks. Phillips told the court that the school had worked with the IRS, the past landlord's bank, and the retirement fund to cut a deal that would release enough money to cover payroll when the school got its state funds later on Tuesday or Wednesday. Of the $167,520 the TAE would get from the state, teacher paychecks and health insurance premiums would be paid before the remaining funds would be distributed among various payment plans.

While Judge Frank R. Monroe entered the deal, he also questioned whether bankruptcy proceedings could really help the school. "Has anyone made an analysis of the ability of this entity to crawl out of this hole?" he asked. "This is not a normal business where you can just increase revenue."

But while Phillips acknowledged that there were many questions that remained to be answered, TAE Superintendent Dolores Hillyer said that the school was taking care of what mattered most. "I have to get the teachers paid, and this is the way to do it," she said.