## Facts

- Nasson College (Nasson), a private college in Maine, filed for Chapter 11 bankruptcy in November 1982.
- On the petition date, Nasson held institutional accreditation from the New England Association of Schools and Colleges, Inc. (NEASC), a private, voluntary accrediting association.
- In spring 1983, Nasson decided to cease educational operations and end its instructional programs after the 1982–83 academic year.
- After communicating with a Nasson administrator about the shutdown, NEASC informed Nasson that it would terminate Nasson’s accreditation because Nasson was ceasing educational activities.
- In May 1983, NEASC formally voted to terminate Nasson’s accreditation.
- Nasson did not pursue an internal appeal of the termination within NEASC’s procedures, and the bankruptcy court was not told about the termination at the time.
- In November 1984, the bankruptcy court issued an order contemplating Nasson’s reorganization as a functioning college using a reduced core campus.
- Nasson, the creditors’ committee, and Edward Matter (an experienced educational-institution operator) entered an agreement for Matter to assume control provided Nasson retained its charter and degree-granting authority.
- In March 1985, the bankruptcy court entered a further order stating that Nasson could continue operating with the degree-granting authority, privileges, and accreditations it had on the bankruptcy filing date.
- In September 1985, Nasson resumed offering educational programs.
- NEASC took the position that Nasson was no longer accredited because the accreditation had been terminated in 1983, and that Nasson would have to reapply and proceed through the accreditation process again.
- Nasson filed an adversary complaint asserting that accreditation was property of the estate under 11 U.S.C. § 541 and that NEASC’s termination (and later refusal to treat Nasson as accredited) violated the automatic stay and the anti-forfeiture provisions of § 541(c).

## Issues

1. Whether a debtor-college’s institutional accreditation from a private accrediting association is a “legal or equitable interest” that becomes property of the estate under 11 U.S.C. § 541.
2. If accreditation is estate property, whether NEASC’s post-petition termination and refusal to recognize Nasson as accredited violated 11 U.S.C. § 541(c) and/or the automatic stay under 11 U.S.C. § 362(a).

## Decision

- The court ruled for NEASC and denied Nasson’s requested relief.
- The court held that NEASC accreditation was not “property of the estate” within the meaning of § 541.
- Because accreditation was not estate property, NEASC’s termination of accreditation and its refusal to treat Nasson as accredited did not violate § 541(c) or the automatic stay under § 362(a).
- The court declined to use bankruptcy law to compel NEASC to treat Nasson as accredited after Nasson had ceased operations and later restarted.

## Legal Principles

- Section 541 is broad, but it does not convert every valuable status or relationship into “property of the estate”; the debtor must have a property-type interest recognized by law.
- Institutional accreditation by a private accreditor is a continuing status dependent on ongoing educational operations and continued satisfaction of the accreditor’s standards; it is not a transferable asset controlled by the debtor.
- Where the asserted interest is not estate property, actions affecting that interest are not acts to obtain possession of, or exercise control over, estate property for purposes of § 362(a).
- Section 541(c) targets contractual or legal provisions that modify or terminate a debtor’s property interest because of insolvency or bankruptcy; it does not require a private accreditor to maintain accreditation when the institution no longer meets the accreditor’s operational and substantive requirements.
- Bankruptcy courts generally will not function as accrediting bodies or force an accreditor to confer or continue accreditation as a bankruptcy remedy.

## Conclusion

Nasson College held NEASC accreditation when it filed Chapter 11, later ceased educational operations, and NEASC terminated accreditation during the case; when Nasson restarted programs, NEASC required a new application. The bankruptcy court held the accreditation status was not property of the estate under § 541, so NEASC’s termination and refusal to recognize Nasson as accredited did not violate § 541(c) or the automatic stay under § 362(a), and the court would not order NEASC to reinstate the accreditation.


Nasson College v. New England Association of Schools and Colleges, 80 B.R. 600 (1988)