A shareholder may inspect the books and records of a for-profit education provider in order to look into the default rate of federally-backed loans taken out by students at schools owned and operated by the company, a Delaware Court of Chancery master in chancery has decided.
In Walther v. ITT Educational Services, the master granted shareholder Alden Walther Jr.’s demand under Section 220 of the Delaware General Corporation Law. Walther had petitioned the court to open ITT’s corporate books and records in order to investigate what he termed possible mismanagement, waste and breaches of fiduciary duty. He was concerned, the master’s report said, with ITT’s handling of student loans given public disclosure of default rates for the years 2009 through 2012, and a U.S. Senate committee report that said ITT had only recently begun to focus on reducing default rates.
