As the June 30 deadline for closing Lambuth University came and went last week, the Jackson, Tenn., private school was out of business but still in limbo.

The Lambuth board of trustee’s decision to sell the assets of the private school to a group of Jackson intermediaries was followed by a decision to file for federal chapter 11 bankruptcy reorganization.

The bankruptcy petition was always an option but not necessarily an automatic part of the process.

Memphis attorney and Lambuth board chairman Mike Keeney said the money the Jackson group, which included Jackson-Madison County government, came up with was short of the $10 million goal.

“They’ve offered to buy the assets for $7.9 million,” he said. “The problem is that doesn’t cover all of our debts which required the filing of the chapter 11. What we’re hoping is that through the bankruptcy court we’re going to continue to work through the process to make all that happen.”

Covering all of the debt or reaching a settlement with creditors for a lesser amount is a critical first step of several steps since the state won’t accept the title to Lambuth if there are any outstanding debts.

With either a payment of all debts or a settlement with creditors, the title to the campus would then be transferred to the state Board of Regents. The regents would then vote to turn Lambuth into a branch campus of the University of Memphis.

University of Memphis officials have had little comment beyond saying their goal is still to hold classes at Lambuth starting in August. And the university, which is part of the Tennessee Board of Regents higher education system, has $5 million in state funding for operation of Lambuth.

But until there is a transfer of the title and a vote by the board of regents, the university is limited in its planning. The Tennessee Higher Education Commission is due to issue a report in August that will cover the contingencies and answer specific questions about how the conversion of Lambuth from a private to a public university will work.

“Our hope is that since it’s a reorganization we can sort of work through the sale of the property,” Keeney said. “We’re just going to have a fixed pot of money. There is no more revenue coming in for us.”

As the long holiday weekend began, Lambuth planned to remain open for limited administrative functions. For that reason, utilities to some buildings on campus remained on over the holiday weekend with plans to keep the lights on past that.