Foundation moves against UW System as some funds are released

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This article has been updated to correct Mark Bromley’s title.

In a busy day in Bankruptcy Court Tuesday, the UW Oshkosh Foundation filed a legal action against the University of Wisconsin System, won preliminary permission to pay out $500,000 between now and the end of the year and expressed confidence that 1,200 pages of documentation it filed with the court would keep endowed and other restricted funds away from creditors.

In its complaint against the UW System, the foundation alleges that it “is entitled to recover [from the system]the full amount due it directly or on account of the guarantees it extended” to the lenders involved in three troubled real estate projects.

“The UW System’s actions violated the duty of good faith, fair dealing and cooperation that is implied by law into all contracts in the State of Wisconsin,” the complaint states.

Mark Bromley, an assistant state’s attorney general, said he would accept service of the complaint but did not comment on its substance.

The state has previously argued that guarantees made to the foundation are not enforceable because the state constitution forbids such promises on behalf of a private entity. But this issue may be muddled because the foundation, while private, was pursuing a public purpose.

U.S. Bankruptcy Judge Susan V. Kelley indicated she would allow the foundation to release half a million dollars to sports teams and academic departments.

Creditors did not oppose this proposal, but they said they reserved their right to review the foundation’s documents regarding endowed and restricted funds of roughly $27 million.

Judge Kelley suggested mediation might be appropriate but acknowledged it might be too soon to pursue that option.

Photo: The UW Oshkosh Foundation maintains offices in the Alumni Welcome and Conference Center, on which it owes almost $6 million. Copyright 2017 Miles Maguire.

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Miles Maguire

Miles Maguire is the author of Advanced Reporting: Essential Skills for 21st Century Journalism. He was the founding editor of the Oshkosh Community News Network, a nonprofit online news organization whose work was cited as a notable innovation in journalism in the 2005 Knight-Batten Awards. Send questions, comments and suggestions to miles.maguire@yahoo.com.

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