Shalom Torah schools file for bankruptcy

The financially troubled Shalom Torah schools have filed for bankruptcy protection as a first step in regaining solvency even as they add new programming.

Shalom Torah Academy in Morganville has 186 students preschool-eighth grade; figures for the school in East Windsor were not available.

Administrators say they will continue to offer quality education while they stabilize their finances. “I know the big, bad B word scares everybody,” said Rabbi Moishe Bak, who took over as headmaster at the Morganville school Oct. 15. “Actually, it’s a positive step. We have acknowledged mistakes were made in the past…that led to the economic situation that finally came to a head and put the schools in a terrible position.”

Bak said a new board of directors, installed last fall, has developed a new financial plan in consultation with legal, rabbinic, and educational leaders that has the Orthodox day schools heading in a new direction. Bak said he believes it will allow them to eventually pay all their creditors.

Under the Chapter 11 filing, made Feb. 25 in federal court in Trenton by attorney Barry W. Frost of Trenton, the entity continues operations but is protected by the court from its creditors as it gets its financial affairs in order.

Several months ago, the schools also brought in the centers’ first CEO, Rabbi Shlomo Teichman, who has 40 years’ experience running day schools.

Bak said the new leadership has “an amazing vision” that was being held back by the burden of creditors demanding immediate payment. “We want to make this the best academy it can be, but the bills from years of strain have come, and we can’t pay them and continue to build our schools.”

In a letter sent to parents that Bak provided to NJJN, he assured them, “No longer will funds that come into the school be used for past mistakes, but rather, for the education of your children only.”

Its teachers, who filed a complaint with the Department of Labor at the start of the year for non-payment of salaries, are now receiving regular paychecks, said Bak. He attributed rumors that teachers were still not being paid their full salaries to a missed pay period in September or October.

Despite the bankruptcy filing, the school views as a positive sign a recent grant from the Caroline and Joseph S. Gruss Life Monument Funds, which supports secular education at yeshivot and day schools. It is being used to purchase new computers and outfit language and science labs.

“I don’t think the Gruss Foundation would be providing tens of thousands of dollars to a school it didn’t believe was moving in the right direction,” said Bak, who said the school was “open and honest” with the foundation about the schools’ financial difficulties.

Bak acknowledged that some students left the school last year, but didn’t give specific numbers. He said he is confident enrollment will increase next year, saying community members have shown renewed interest in the school.

The schools also hope to develop a closer relationship with local Jewish federations, said Bak, “because we are part of a community, and we need to work with our community to help our children grow.” The Morganville school has not been a beneficiary of the Jewish Federation of Monmouth County since 2004, said its executive director, Howard Gases.

Andrew Frank, executive director of United Jewish Federation of Princeton Mercer Bucks, said the East Windsor school receives a small annual stipend.

Calls by NJJN to Frost and to Rabbi Yaakov Freedman, Judaic studies principal at the East Windsor school, were not returned.