A Maryland online education giant has filed for Chapter 11 bankruptcy and will be restructuring its debts amid concerns that it did not have enough cash on hand. The company, 2U, provides online classes and programs for the University System of Maryland and hundreds of other institutions.

Services and programs will not be disrupted, and there will be no impact on students, the company said on its website. Through EDx, an online platform that 2U previously acquired, the Maryland system offers over 20 programs and more than 60 individual courses on topics such as entrepreneurship and project management.

The company’s Chapter 11 agreement with its lenders will provide approximately “$110 million of new capital, reduce its debt by over 50% to approximately $459 million” and extend the terms of its loans, according to a press release from 2U. The company’s restructuring means it will now become a private company.

“We have been actively working with our debt-holders to deleverage our balance sheet and position the company for long-term stability, sustained innovation, and growth”, said CEO Paul Lalljie in a video statement following the announcement.

As of market close on Wednesday, when the Chapter 11 filing was announced, the company was valued at around $11 million dollars, down from its 2018 peak of $5 billion dollars, The Washington Post reported.

Between December 2022 and April 2024, the company reduced its head count by 29%, laying off over a thousand employees, according to a presentation to investors.

The company had previously expressed concern that unless it was able to refinance its debt or raise additional capital in the short term, it would “likely not have sufficient cash on hand … to pay off the balance of our term loan”, according to 2U’s latest yearly statement.

The company identified its ability to expand and maintain partnerships with certain universities as a potential risk to its growth in its latest yearly statement. Because colleges offer their online courses through 2U’s platforms, they often contractually require 2U to avoid offering the same or similar courses to competing universities, limiting 2U’s ability to expand. The company has already agreed to make cash payments and reduce revenue share to “eliminate or reduce certain exclusivity obligations,” according to financial statements.

Shortly after the bankruptcy was announced, investors filed a class-action lawsuit alleging, among other things, that the company concealed that it was unable to sustain relationships with key universities, according to Levi & Korsinski, the firm behind the lawsuit.