We entered into a strategic transaction with our debtholders that will provide approximately $110 million of new capital, reduce our debt by over 50%, and extend the maturity date of our revolving and term loans to over two years following closing of the transaction. With new capital and a healthier balance sheet, we will be positioned to continue to invest in our technology, services, and innovative, career-relevant programs.

To effectuate this transaction as quickly as possible, we made the decision to file voluntary “prepackaged” Chapter 11 cases under the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. This process will allow us to restructure our debt swiftly and efficiently, and we expect to complete this process by the end of September, if not sooner.

Chapter 11 is a process in the U.S. that helps companies restructure their debt while operations continue in the ordinary course of business. Many well-known companies have used the Chapter 11 process to restructure their balance sheets and have emerged stronger – including American Airlines and Hertz – and are viewed as category leaders today. 

A Chapter 11 filing is considered “prepackaged” when a company has already negotiated and obtained agreement on the terms of the transaction from its financial stakeholders prior to filing for Chapter 11. A prepackaged Chapter 11 case can typically be completed in a much shorter time period than a regular Chapter 11 case, minimizing disruption to the company’s operations. 

Note that Chapter 11 is a U.S. legal framework and can vary significantly from similar in-court reorganization processes in other countries. For example, in a Chapter 11 process, a company’s management team remains in control of the company, and operations continue in the ordinary course. Whereas, in the UK “administration” framework or South Africa’s “business rescue” process, an outside practitioner is appointed to manage the business. Additionally, unlike court processes in certain other countries, a Chapter 11 filing in the U.S. does not mean the company is going out of business or liquidating.

No. 2U is not going out of business, and we are driving forward with the strong support of our debtholders, who have great confidence in 2U and our long-term strategy. During this process, we continue to operate business as usual, all programs and services will continue seamlessly, and there will be no impact or disruption to our partners and learners as a result of this process. At the conclusion of the Chapter 11 process, which we aim to complete by the end of September, if not sooner, we will be financially stronger. 

During this process, we will continue to operate business as usual. All programs and services will continue seamlessly, and there will be no impact or disruption to our partners and learners. 

We deeply value our partnership with you. You and your institution are an important part of the success of our business, and we know you have placed your trust in us to act as your partner and a steward of your institutional mission. Throughout this process, we are keeping you and your learners at the forefront of all decisions. Delivering best-in-class products and the high-quality service you have come to expect from us remains our priority.

All services and programs will continue seamlessly, and there will be no impact or disruption to our partners or learners as a result of this process. 

2U has strong business fundamentals and a promising future ahead. However, without this action, our capital structure would not have been sustainable in light of our existing business plan and the liquidity required to address debt maturities coming due in January 2025. We’ve been working closely with our debtholders to reduce our debt and strengthen our financial position, and we explored many potential avenues. Ultimately, our Board determined that this transaction provided the best route to achieve our goals by significantly reducing and restructuring our debt and securing new capital for future investments. Today, amid a significant shortage of skilled labor in the U.S. and the impact of AI and automation on the workforce, our technology and services are crucial. Taking this action now positions us to support our partners in meeting learner needs to reskill and upskill to compete in the job market of the future.

This process will allow us to restructure our debt swiftly and efficiently, and we expect to complete this process by the end of September, if not sooner.

Yes. Through this strategic transaction, we will reduce our total debt by over 50% and secure approximately $110 million of new capital to support our future growth. With a stronger financial foundation, we will position the business for profitability, growth, and continued investment in our mission well into the future. 

The strategic transaction allows 2U to continue operating in the ordinary course of business, including continued payment of revenue share and other payments owed to partners.

We do not anticipate any delays in payment to partners as a result of the Chapter 11 process. All current payments owed have been approved by the court. Future payments will be approved by the court as they are due. This is standard for the Chapter 11 process.

Chapter 11 is a transparent process, where broad information about the company is available to the public. Many of the revenue share payments owed to partners are listed publicly in court filings as well as corresponding media coverage.

We enter this process with strong support of our new owners who believe in 2U’s mission and long-term strategy. Delivering best-in-class products and the high-quality service you have come to expect from us remains our priority throughout this process. Above all else, we want to assure you that delivering on our commitments to you remains our top focus, and we plan to continue to do so at the highest levels throughout this process.

For over 15 years, 2U has led the higher education industry in the creation and delivery of world-class online programs that produce positive learner outcomes at scale. Non-profit universities and leading companies around the world continue to partner with us to connect millions of learners with high-quality, transformative learning opportunities. This transaction will only enhance our ability to expand that mission and impact, creating more opportunities for more learners.  

Our commitment to delivering best-in-class programs and the high-quality service you expect from us remains unchanged. Most importantly, supporting you and your learners continues to be our highest priority.

With a stronger financial foundation, we will be positioned to continue investing in technology, services, and career-relevant programs, creating sustained growth and innovation in online education for years to come.