The CFPB announced that it has obtained a final default judgment against Corinthian Colleges, Inc. from the Illinois federal court in which it sued Corinthian in September 2014. In May 2015, Corinthian filed a petition under Chapter 11 of the Bankruptcy Code and in August 2015, the bankruptcy court entered an order confirming a liquidation plan.
The default judgment follows the court’s approval of a motion to withdraw filed by Corinthian’s counsel in which counsel stated that due to the company’s anticipated liquidation and dissolution, Corinthian would no longer be able to continue its defense of the CFPB’s action. The default judgment contains findings that Corinthian engaged in unfair and deceptive practices in violation of the CFPA and violated the FDCPA. In addition to permanently enjoining Corinthian from committing future UDAAP and FDCPA violations, the default judgment includes a judgment for equitable monetary relief in favor of the CFPB in the amount of $531,224,667 (which is stated to represent “the amount of damages owed to [injured consumers] proven through competent evidence.”)
The default judgment appears to have little practical value given the CFPB’s acknowledgment in its press release that “Corinthian cannot pay the judgment because it has dissolved and its assets have already been distributed according to the liquidation plan in its bankruptcy case.” And given that the CFPB’s legal theories were not litigated, the default judgment does not serve as vindication of the CFPB’s views.