Germantown Settlement subsidiary going bankrupt

As further evidence of Germantown Settlement's continuing financial collapse, a key subsidiary of the venerable nonprofit has filed for bankruptcy.

The subsidiary, Greater Germantown Education Development Corp., owns the property that once housed Settlement's now-defunct charter school. GGEDC owes $2.8 million to Prudential Insurance Co. of America, which holds a mortgage on that property.

GGEDC's Chapter 11 filing March 18 followed a rash of court actions against Germantown Settlement and its subsidiaries for unpaid bills, delinquent loans, and back taxes. By its own calculations, Germantown Settlement owed $38 million as of last August.

Albert Ciardi III, the attorney representing GGEDC, said the nonprofit was still documenting its total debt and would not have a complete figure until next week. He said the Prudential mortgage represented the largest portion of the debt.

GGEDC's goal is to reorganize and come out of bankruptcy as a going concern "that will continue to complete its mission in Germantown," Ciardi said.

Emanuel V. Freeman, Germantown Settlement's president, declined to comment on the bankruptcy filing.

GGEDC's troubles stem from the collapse of the Germantown Settlement Charter School in June. The school rented a property at 4811 Germantown Ave. from GGEDC, which in turn used the money to cover its mortgage.

The charter school lost its accreditation with the Philadelphia School District last year. At the time it closed in June, it owed GGEDC $342,000 for nine months' rent, according to a letter Freeman sent supporters in August.

"As a result, GGEDC is in default of its mortgage on the property and is currently working toward a loan-modification agreement," Freeman wrote.

GGEDC's debts are but a small piece of the financial disaster that has befallen Germantown Settlement, a 126-year-old social-service agency originally started by Quakers to aid newly arriving immigrants.

After 28 years under Freeman's leadership, Germantown Settlement and its subsidiaries now face more than $2 million in liens for unpaid city, school district, state, and federal taxes dating to 2007.

The U.S. Department of Housing and Urban Development has foreclosed on two of its apartment complexes for the elderly. The Philadelphia Redevelopment Authority has gone to court to reclaim $1.3 million it lent the organization to buy the Germantown YWCA; the building goes up for sheriff's sale next week.

In addition, Freeman was charged in August with a summary offense for failing to make $11,668.83 in payments to the state unemployment-compensation fund.

Germantown Settlement has been all but exclusively funded by taxpayer loans and grants. Its 2007 tax return, the last on record, shows it received $4.8 million in government contributions. That money represented the vast majority of its $5.2 million in total revenue.