Judge rules foundation deals to be public debt

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A federal bankruptcy judge has ruled against the state in its effort to escape financial obligations incurred by the University of Wisconsin Oshkosh Foundation.

Meanwhile a big part of the foundation’s money problems could be alleviated by the potential sale of the biodigester it financed for the 8,000-cow Rosendale Dairy.

At an April 5 hearing, U.S. Bankruptcy Judge Susan V. Kelley encouraged the foundation to file a legal motion to resolve the case in its favor, signalling that she puts little stock in the arguments advanced by the University of Wisconsin Board of Regents about where the responsibility lies for cleaning up the mess.

“It’s a very challenging case, and I would invite the debtor to move for summary judgment,” Kelley said.   A motion for summary judgment is a way to avoid a full trial and is based on the idea that, no matter how the facts of a dispute are interpreted, the law would require a ruling in favor of one party, in this instance the university’s foundation.

Her ruling against a legal maneuver by the state, formalized in an order dated April 12, is the most definitive rejection to date of the UW System’s arguments that the foundation and former UW Oshkosh officials acted illegally in structuring certain real estate projects. She found that these financial arrangements are valid public debts under state law.

Part of Kelley’s plan is to move the matter to the appeals process as quickly as possible because the case involves issues that will need to be addressed at a higher level, including the  interpretation of the state constitution and whether the state is immune from legal action in this matter.

“I am trying to get you upstairs on the fast elevator, not the local,” she told the parties.

Outside the courtroom other steps are being taken that might help to resolve the foundation’s bankruptcy. An attorney for the foundation said in court that negotiations are underway to sell the Rosendale biodigester, which represents about $7 million of the foundation’s financial problems. When it filed for bankruptcy, the foundation listed about $16 million in liabilities.

Neither the foundation nor the UW System responded to requests for comment.

Photo: The UW Oshkosh Alumni Welcome and Conference Center is part of the dispute between the university and its foundation.

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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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