I found this WonkHE article on insolvency interesting and the current state of thinking at government and by others on what would happen if a university was to fail.
Insolvency legislation “permits continued trading” if a university enters compulsory liquidation. How so?
The view of the Minister
“…were an organisation to enter into compulsory liquidation, we believe that insolvency legislation permits continued trading during that period of compulsory liquidation. It would mean, therefore, that we would be able, as I have described, to support students, to support research and the important capacity of that provider during the period of liquidation, and to make sure particularly that students had the opportunity to be supported through a teach-out of their course, to be supported to move elsewhere, and to have their records and their achievements protected.”
I did think this from Mills & Reeve was interesting as well.
“The vast majority of entities operating as HEIs are not able to go into an insolvency process, save possibly for liquidation. This is because they are mostly incorporated by Royal Charter or are HECs, and are not therefore companies under the insolvency legislation.”
There was news a few weeks back that there were some universities on the verge of bankruptcy. We still really don’t know what will happen if an HEI fails. The smaller failures in higher education we have seen before have been private companies.
From a digital and technology perspective, could a failed institution continue to maintain a secure and stable infrastructure for example? You can well imagine professional services staff leaving, both as the organisation was wound down, but also as they moved to new and more secure jobs.
We know that the OfS perspective in England is to protect the needs of the student, hence the talk of “teach-out” and supporting students move to other providers. I do think that the actual process will depend a lot on the geographical location of the failed provider. For example, a provider in a large metropolitan area offers students more options, whereas a sole provider in a larger rural part of the country, there are less options.
I do think though that a better option is to avoid reacting and being more proactive in avoiding insolvency. This does mean thinking very differently about the way the university as a business is managed and transforming the operating model to something that is a lot more sustainable. Of course the challenge with that is though there are lots of similarities between higher education institutions, there are enough substantial differences, meaning there isn’t one model with fits all.