Struggling education brand closed after Chapter 7 bankruptcy

Bacone College, a 140-year-old Native-serving institution in Oklahoma, has been shut down and ordered into Chapter 7 liquidation after a judge cited mismanagement and financial collapse. The school had filed for Chapter 11 bankruptcy in 2024, but now faces total closure.

Many colleges have a deep history and connection to their community, but Bacone's ran deeper than most.

Bacone College, formerly the Indian University, “was founded in 1880 to educate Indian Students,” according to its website.

The school played a very important role in its early years.

“At the height of Indian Removal the Muscogee (Creek) Nation donated land to the American Baptist Church and namely the American Baptist Home Mission Societies (ABHMS) to establish Bacone College,” it continued.

Bacone College shared a current mission statement on its website.

“As a historic American Indian-serving institution, Bacone College provides a quality, holistic, liberal arts, educational experience for students in a culturally diverse environment, empowering life-long learners with the knowledge, skills, and capacity to be transformational leaders in both Native and non-native communities,” it shared.

Things began to fall apart for Bacone around a year ago.

“On June 27, 2024, the Higher Learning Commission (HLC) acted to withdraw the accreditation of Bacone College in Muskogee, Oklahoma,” the school shared on its website.

Bacone College filed for Chapter 11 bankruptcy around when it lost its accreditation.

The school has remained open for existing students, but has not been taking new admissions.

Bacone College has been closed by court order.

Image source: Bacone College

Bacone College forced into Chapter 7 bankruptcy

U.S. bankruptcy trustee Ilene Lashinsky filed a motion in June citing “gross mismanagement” including a disputed payment of approximately $16,500 on a loan in Acting President Leslie Hannah’s name, alleging that the funds had been misused.

In the filing, Lashinsky asked for the Chapter 11 bankruptcy to be converted into a Chapter 7 bankruptcy filing.

“The U.S. Trustee submits that the appropriate action in this instance is conversion to a Chapter 7 case. This case is stagnant and the Debtor’s only hope is that an investor may come in and purchase the real estate assets of the Debtor. This is the best option for creditors to get paid. And a Chapter 7 trustee is fully capable of managing and negotiating that transaction on behalf of Debtor’s estate,” the filing read.

In May, a federal judge agreed that the case be converted to a Chapter 7 case, citing “gross mismanagement” by college officials, one of whom, the trustee alleged, used the institution’s bank account to pay his personal expenses.

In late May, Bacone College was ordered to turn over access to the campus so it can be liquidated. All educational operations ended at that time.

Bacone has been failing for some time:

In fall 2023, Bacone had just 106 students, less than half the number of just five years earlier and a fraction of the 1,184 students the college enrolled in 2010, according to data from HigherEdDive.
Bacone sought tribal college status, which would have made it eligible for additional federal funding. The Osage Nation and Cheyenne, Arapaho, Kiowa and Otoe-Missouria tribes agreed to charter it, but the college never won tribal college status from the federal government.

Key Bacone College events and timeline

June 2024: Bacone College in Muskogee, Okla., filed for Chapter 11 bankruptcy, seeking to reorganize and continue operations while addressing mounting debts.
June 2025: U.S. bankruptcy trustee Ilene Lashinsky filed a motion citing “gross mismanagement” — including a disputed payment of approximately $16,500 on a loan in Acting President Leslie Hannah’s name with allegations of misuse of college funds.
Mid‑May 2025: A federal judge granted the trustee's motion and converted the case from Chapter 11 (reorganization) to Chapter 7 (liquidation), triggering a managed wind‑down of the college’s assets.
May 21, 2025: Bacone College was ordered to turn over all keys and physical control of the campus immediately to the bankruptcy trustee — effectively ending any remaining institutional operations.