Higher Ground Education: Montessori Giant's $440M Collapse

Higher Ground Education, Inc. and 33 affiliated entities filed for chapter 11 bankruptcy protection on June 17, 2025, in the United States Bankruptcy Court for the Northern District of Texas. The filing followed the decline of what had been one of the largest owners and operators of Montessori schools, with total funded debt of $144 million and operating losses exceeding $440 million over five years.

The company shrank from over 150 schools to just seven operational facilities at the petition date after raising over $335 million since 2020 without achieving positive cash flow. A series of pre-petition foreclosures stripped away substantially all operational assets before the bankruptcy filing. On November 26, 2025, Judge Michelle V. Larson entered the Confirmation Order approving the Modified Second Amended Joint Plan of Reorganization, with an Effective Date of December 16, 2025.

Corporate History and Venture-Backed Expansion

Higher Ground Education was founded in 2016 by Ramandeep (Ray) Girn and Rebecca Girn with a stated mission to "modernize and mainstream" Montessori education at scale. Ray Girn started his Montessori career in 2003 as a math and science teacher at LePort Schools, a chain of three Montessori schools in southern California. He became CEO in 2009 and over the next thirteen years grew LePort into the largest Montessori operator in the United States through acquisitions, ultimately expanding to 20 schools before founding Higher Ground Education.

The company operated schools under the Guidepost Montessori brand for early childhood education and Guidepost Academy for elementary and middle school students. Growth accelerated rapidly: from 12 schools in 2018 to 27 schools in 2019, 60 schools in 2020, and over 150 schools by 2024. Operations spanned Texas, North Carolina, California, New York, Illinois, Florida, Virginia, and international locations in China and Hong Kong.

Higher Ground Education attracted venture capital backing to fuel its expansion. In January 2021, the company secured a $40 million Series C funding round led by Venn Growth Partners. The Toronto-based growth equity fund invested over $20 million as lead investor, including affiliates and co-investors Heal Partners and Valinor, bringing total venture capital raised to $70 million at that time. At the Series C, the company operated 80 schools serving approximately 7,000 students and aimed to open 40 new schools annually. Just three months later, in April 2021, Higher Ground raised $30 million in Series D funding led by Learn Capital. The round included the acquisition of FreshGrade, a digital portfolio and assessment platform with over 18 million portfolios created and 85,000 teachers using the system. The company ultimately raised $105 million from investors including Learn Capital, Peak State Ventures, Venn Growth Partners, and LearnStart.

The technology acquisition strategy extended beyond FreshGrade. In January 2021, Higher Ground acquired Altitude Learning's learning management system—the technology arm of AltSchool, which had raised $174 million in venture capital from prominent backers including the Chan Zuckerberg Initiative, Founders Fund, and investors associated with Laurene Powell Jobs, Pierre Omidyar, and Marc Andreessen. In December 2022, Higher Ground acquired NeighborSchools, a platform supporting in-home childcare programs, to enable a "Hub & Spoke" model integrating center-based and in-home offerings.

Financial Deterioration and Mass Closures

Despite raising over $335 million since 2020, Higher Ground Education never generated positive cash flow, consistently relying on existing investors for short-term liquidity, according to the First Day Declaration. Individual schools were running losses of $50,000+ per month that creditors would no longer subsidize.

Financial pressures intensified on February 25, 2025, when co-founders Ray and Rebecca Girn resigned. Jonathan McCarthy, a board member and managing partner of Venn Growth Partners (both an equity and debt holder), was appointed Interim President and Secretary by independent board member Marc D. Kirshbaum. The leadership transition occurred amid what co-CEO Maris Mendes later described as a "hyper-scaling" strategy that exceeded the company's financial and operational capacity.

Since the beginning of 2025, at least 16 closures were reported across Colorado (5), Ohio (3), Iowa (2), Minnesota (2), Missouri, Oklahoma, Virginia, and Wisconsin. Mendes acknowledged the company was closing "nearly 1/3 of the school communities built over the past 9 years," attributing the closures to the hyper-scaling strategy. In Colorado alone, five Guidepost Montessori schools announced sudden closures affecting approximately 300 families. The Daily Camera reported that the Longmont location, which opened in July 2020, had been placed on probation twice by the state and faced violations including staff making false statements about alcohol on premises and unsupervised infants. Parents received closure notices via email with as little as two weeks' notice.

In Iowa, families paying over $1,700 per month received closure notices with minimal warning. The Virginia Beach Red Mill location opened in 2024 and closed by March 2025. One father whose daughter had been enrolled since the location opened described her "initial reaction was her friends, and how she's going to lose her friends." These closures led to policy discussions about notice requirements. As Early Learning Nation noted, families received at most one month's notice—and some learned of closures only the night before locks changed.

Capital Structure and Pre-Petition Foreclosures

Higher Ground Education's capital structure at filing reflected the use of multiple financing sources, as detailed in the Disclosure Statement. The company's total funded debt of $144.2 million included $117.8 million in convertible notes (CN Notes) issued under a Note Purchase Agreement, with Learn Capital entities holding majority positions. An additional $4.8 million in Bridge CN-3 Notes represented secured bridge financing obtained in early 2025, while $4.7 million remained on WTI Loan Agreements after partial foreclosures. From 2017 to the petition date, the Debtors also raised approximately $50 million through the EB-5 Immigrant Investor Visa program, with investors holding Series B or Class B membership interests in various HGE subsidiaries.

Prior to the chapter 11 filing, multiple foreclosures stripped away substantially all operational schools. On March 22, 2025, WTI foreclosed on certain collateral and sold those assets to Guidepost Global Education, Inc. for approximately $23.08 million, including substantially all intellectual property and other assets needed to operate the schools. Additional foreclosures by Learn Fund XXXVII transferred certain school assets to Cosmic Education Americas Limited (CEA), while a direct sale to CEA raised $1.2 million for various assets. By the petition date, only 7 of the original 150+ schools remained under debtor control.

The EB-5 program investors, represented by Yu Capital, LLC and EB5AN Investment Management, faced questions regarding both their financial investments and immigration status. Several EB-5 investors filed Rule 2004 examination motions seeking job creation documentation for their Form I-829 petitions, emphasizing urgency due to immigration-related deadlines. The Plan ultimately transferred designated EB-5 entities to Guidepost Global Education, with investors retaining their limited interests—a structure intended to preserve the corporate framework necessary for immigration proceedings.

Chapter 11 Proceedings and Global Settlement

The chapter 11 cases proceeded with a pre-arranged restructuring plan supported by key stakeholders. The company requested court approval for a restructuring support agreement that included $8 million in DIP financing under the DIP Motion to fund the bankruptcy case.

The DIP facility was structured in two tranches. YYYYY, LLC (Five Y) provided up to $5.5 million as Senior DIP Lender, rolling up $500,000 of prepetition bridge obligations at 9% interest (12% upon default). Guidepost Global Education, Inc. committed at least $2.5 million as Junior DIP Lender, rolling up $1.5 million of prepetition bridge obligations. The court entered the Interim DIP Order on June 20, 2025, followed by the Final DIP Order on July 22. The U.S. Trustee objected to the roll-up provisions, arguing they "inappropriately" improved priority of junior creditors, and challenged liens on avoidance action proceeds. The Debtors defended the DIP terms, with the Committee agreeing to a "last look" concept for avoidance action proceeds that preserved the Committee's ability to challenge the roll-up if avoidance actions proved fruitful.

The Official Committee of Unsecured Creditors, appointed July 8, 2025, played a role in negotiating the Global Settlement and jointly proposed the confirmed Plan with the Debtors.

The Plan embodies a Global Settlement resolving disputes arising from prepetition foreclosures, asset sales, and claims against directors and officers. Settlement Parties included 2HR Learning, Inc. (Plan Sponsor), YYYYY, LLC (Senior DIP Lender), Guidepost Global Education, Inc. (Junior DIP Lender), Learn Capital, Yu Capital, LLC, WTI, Cosmic Education Americas Limited (CEA), TNC Schools LLC, and Venn Growth GP Limited LP.

Under the settlement, 2HR Learning contributed $5.5 million (minus the Senior DIP Lender Claim) to the Liquidating Trust, while Settlement Parties collectively contributed $1,950,000 in cash to fund distributions to general unsecured creditors. This structure resolved disputes over the prepetition foreclosure transactions and funded distributions to unsecured creditors.

Professional Retentions.

The Debtors retained counsel and advisors for the multi-debtor case and confirmation process.

The Debtors obtained authorization to pay prepetition wages, salaries, and reimbursable employee expenses totaling approximately $238,941, ensuring continuity for remaining staff through the transition period.

The Court established interim compensation procedures allowing professionals to receive 80% of fees monthly, with 20% holdbacks pending final fee review. Final professional fee applications were due February 14, 2026 (45 days after the Effective Date).

Contested Matters and Objections.

Beyond the U.S. Trustee's DIP objection, several parties raised challenges during the case:

Texas Taxing Authorities filed a limited objection asserting that their statutory tax liens should not be primed by DIP financing. The objection was later withdrawn after the parties reached a resolution.

Carl B. Barney, a creditor with claims exceeding $30 million, filed an objection to the Disclosure Statement alleging concealment, bad faith, and inadequate disclosure. He argued the Plan was unconfirmable due to unilateral claim extinguishment, impermissible third-party releases, and a potentially fraudulent insurance scheme. This objection was withdrawn prior to confirmation.

Ramandeep and Rebecca Girn (the co-founders) filed an objection asserting claims exceeding $6.6 million. They contested the Plan's treatment of their claims and the breadth of third-party releases. The Second Amended Plan removed the Girns from the Third-Party Release provision, and the Liquidating Trust retained causes of action against them as Non-Released D&Os.

The U.S. Trustee also moved for a stay of the Disclosure Statement hearing due to a lapse in federal appropriations affecting DOJ operations. The Court considered the motion as part of the confirmation hearing and proceeded with the case.

Contract and Lease Dispositions.

The Debtors rejected multiple executory contracts and unexpired leases as part of the restructuring:

Lease rejections included properties held by Pure Tempe Partnership (Tempe, AZ), Quattro Menomonee (Menomonee Falls, WI), Quattro Richmond (Richmond, CA), and Quattro San Rafael (San Rafael, CA). The Debtors rejected leases at two locations that never opened: Quattro Pewaukee (Pewaukee, WI) and Quattro Wheaton (Wheaton, IL).

Through three omnibus motions, the Debtors assumed and assigned numerous contracts and leases to foreclosure buyers (Guidepost Global, CEA, and TNC Schools LLC). The proposed cure amount for all assumed leases was $0, with assignees responsible for ongoing obligations. The Court established August 7, 2025 as the general claims bar date, with a governmental claims bar date of December 15, 2025. Learn Capital and Guidepost Global Education received extensions to August 21, 2025 for filing proofs of claim given their roles as major creditors and DIP participants.

Confirmation and Liquidating Trust

On November 26, 2025, Judge Michelle V. Larson confirmed the Modified Second Amended Joint Plan. Class 8 General Unsecured Claims voted to reject the Plan, requiring the Court to confirm under cramdown provisions pursuant to Section 1129(b). The Court found the Plan "fair and equitable" to rejecting classes, with the absolute priority rule satisfied and the non-discrimination test met.

The best interests test demonstrated that Class 8 creditors would receive an estimated 1.8%-10.1% recovery under the Plan, compared to an estimated 0% in a hypothetical chapter 7 liquidation. Classes 1 through 5 (secured and note claims) voted unanimously to accept, while equity interests in Classes 9-11 were deemed to reject and received no distribution.

The Junior DIP Lender (Guidepost Global Education) forgave its entire claim on the Effective Date in exchange for the Global Settlement releases. The Senior DIP Lender (YYYYY, LLC) received an option to convert up to 100% of its allowed claim into up to 60% of Reorganized HGE's equity.

John Madden was appointed as Liquidating Trustee to administer remaining assets and pursue retained causes of action. Liquidating Trust assets include the Plan Sponsor Consideration, the $1.95 million Settlement Party Payment, surplus DIP cash, D&O insurance policy proceeds, and retained causes of action. The Plan preserves claims against five former directors and officers—Greg Mauro, Rob Hutter, Zheng Yu Huang, Ramandeep (Ray) Girn, and Jonathan McCarthy—for breach of fiduciary duty, aiding and abetting, fraud, willful misconduct, and gross negligence. The Liquidating Trust may pursue these Non-Released D&Os, as well as claims against Venn Growth GP Limited LP and various avoidance actions.

The Plan reached its Effective Date on December 16, 2025, with Reorganized HGE emerging under ownership of 2HR Learning, Inc. and YYYYY, LLC. Post-emergence activity has included the Georgetown School sale for $28,000 and a stipulated order granting relief from stay for insurance proceeds.

By December 18, 2025, the docket exceeded 722 entries, with 175 monthly operating reports filed across all 34 debtor entities and 6 major objections (all resolved or withdrawn). The Plan evolved through four iterations before confirmation, with over 100 parties in interest qualifying the case for Complex Case Designation. A mediation session on August 19-20, 2025 involving Debtors, Committee, GGE, 2HR, and other stakeholders led to RSA termination on September 12, 2025, though settlement discussions continued and ultimately produced the Global Settlement embodied in the confirmed Plan.

Industry Context

Outside the bankruptcy estate, 83 schools continue to operate under Guidepost Global Education, a separate entity formed in spring 2025 to protect the stability of Guidepost Montessori schools. According to the company, roughly 8,000 of 10,000 children enrolled continued their Montessori education without interruption, while approximately 2,000 students transitioned to other providers such as KinderCare or Bright Horizons.

The early education market was seen by investors as highly fragmented and "under-teched", presenting opportunities for consolidation and technology-driven scaling. Yet as TechCrunch noted, only $171 million was invested in care and early childhood education in 2020, rising to $516 million in 2021—still a fraction of total venture capital. Higher Ground Education's bankruptcy occurred amid a broader EdTech funding contraction, with Q1 2024 setting a new global low for EdTech VC funding since 2014.

Frequently Asked Questions

What caused Higher Ground Education to file for bankruptcy?

Higher Ground Education accumulated over $440 million in operating losses over five years while raising more than $335 million in capital. The company pursued a "hyper-scaling" strategy that expanded from 12 schools in 2018 to over 150 schools by 2024, but never achieved positive cash flow. Individual schools were losing $50,000+ per month, and creditors stopped subsidizing operations.

How many schools remained at the time of bankruptcy filing?

Only 7 schools remained under debtor control at the petition date. Pre-petition foreclosures by WTI and Learn Capital transferred substantially all operational assets, including intellectual property, to Guidepost Global Education, Inc. and Cosmic Education Americas Limited. Prior to 2025, the company operated over 150 schools.

What happened to families enrolled in Guidepost Montessori schools?

Outside the bankruptcy estate, 83 schools continue operating under Guidepost Global Education, a separate entity formed in spring 2025. Approximately 8,000 of 10,000 enrolled children continued their Montessori education without interruption. The remaining roughly 2,000 students at closed locations transitioned to other providers such as KinderCare or Bright Horizons.

What is the projected recovery for general unsecured creditors?

General unsecured creditors (Class 8) are projected to receive between 1.8% and 10.1% recovery under the confirmed Plan. This compares to an estimated 0% recovery in a hypothetical chapter 7 liquidation. Class 8 voted to reject the Plan, but the Court confirmed under cramdown provisions.

Who provided DIP financing?

The $8 million DIP facility was structured in two tranches. YYYYY, LLC (Five Y) provided up to $5.5 million as Senior DIP Lender, while Guidepost Global Education, Inc. committed at least $2.5 million as Junior DIP Lender. Both tranches included roll-up provisions that the U.S. Trustee challenged.

What happened to EB-5 investors?

Higher Ground Education raised approximately $50 million through the EB-5 Immigrant Investor Visa program. The Plan transferred designated EB-5 entities to Guidepost Global Education, with investors retaining their limited interests. This structure preserved the corporate framework necessary for investors' ongoing immigration proceedings and Form I-829 petitions.

Are claims preserved against former directors and officers?

Yes. The Plan explicitly preserves claims against five Non-Released D&Os—Greg Mauro, Rob Hutter, Zheng Yu Huang, Ramandeep (Ray) Girn, and Jonathan McCarthy—for breach of fiduciary duty, aiding and abetting, fraud, willful misconduct, and gross negligence. The Liquidating Trust may pursue these claims, as well as claims against Venn Growth GP Limited LP.

What venture capital firms invested in Higher Ground Education?

Key investors included Learn Capital, Venn Growth Partners, Peak State Ventures, and LearnStart. Learn Capital led the Series D round in 2021 and held majority positions in the CN Notes. Venn Growth Partners led the Series C and its managing partner, Jonathan McCarthy, served as a board member.

What technology assets did Higher Ground Education acquire?

The company acquired Altitude Learning's learning management system (from AltSchool, which had raised $174 million), the FreshGrade digital portfolio platform (18 million portfolios, 85,000 teachers), and NeighborSchools (in-home childcare platform). These acquisitions were part of a strategy to apply technology at scale.

What is the Global Settlement?

The Global Settlement resolved disputes arising from prepetition foreclosures, asset sales, and claims against directors and officers. Settlement Parties including 2HR Learning, Learn Capital, WTI, and others collectively contributed $1.95 million in cash to fund distributions to general unsecured creditors, while 2HR Learning contributed $5.5 million to the Liquidating Trust.

Who is the claims agent for Higher Ground Education?

Kurtzman Carson Consultants (Verita Global) serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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