Roycemore School in Evanston, Illinois, defaulted this month on the loan agreement its unrated revenue bonds and will close its doors for the 2026-27 school year.

Processing Content

Roycemore was a co-ed college prep school serving students in pre-K through grade 12. Nestled on the western edge of downtown Evanston, it offered nonsectarian private education in an area generally considered to have high-quality public schools.

On July 15, Roycemore failed to make the interest and principal payment required under the loan agreement for the $8.27 million of Series 2021 educational facility revenue bonds, issued though the city of Evanston as conduit.

After bond trustee Wilmington Trust learned on July 14 that Roycemore’s board had voted to shutter for the next school year, it began “reviewing the implications of this development under the bond documents, including whether additional events of default may have occurred,” according to a July 16 posting on the Municipal Securities Rulemaking Board’s EMMA website. 

In fiscal year 2025, Roycemore saw a $1.46 million decrease in net assets, negative operating cash flows of $1.05 million and a working capital deficiency of $8.18 million, according to the nonprofit’s annual financial statement for fiscal years 2024 and 2025, posted on May 7. 

In the report, management attributed its financial nosedive to decreases in student enrollment and pledged to implement aggressive cost containment measures. But it also said enrollment grew in FY2026 and was only a few students short of the budgeted 223 students.

It then acknowledged “uncertainty regarding the school’s ability to continue as a going concern.”

The Series 2021 bonds are secured by payments on the 2021 note, amounts due under the loan agreement, funds pledged under the indenture and income from the investment of all the above. They are also secured by a mortgage lien on the school and a pledge of Roycemore’s gross revenues.

Bond proceeds refinanced the outstanding part of a taxable loan which had been used to refinance the Series 2011 revenue bonds issued by Evanston on behalf of Roycemore; to fund a debt service reserve fund; and to pay costs of issuance, according to the limited offering memorandum.

The recent default is not the first time Roycemore has violated bond covenants. It also defaulted on the Series 2011 revenue bonds.

Those bonds were secured solely by payments under a loan agreement with Roycemore, monies held under the indenture and collateral pledged by the nonprofit corporation that runs Roycemore.

In July 2016, the Series 2011 bondholders replaced Wells Fargo with UMB Bank as trustee, and the trustee and Roycemore entered into a forbearance agreement which allowed the nonprofit corporation to defer principal payments.

The trustee had been forced to transfer funds from the operating reserve, the bond sinking fund and the debt service reserve fund to make an interest payment due that month, leaving no money in the operating reserve fund, according to an EMMA posting.

Roycemore had failed to make deposits to the revenue fund for the first six months of 2016 per an earlier forbearance agreement. It similarly deposited nothing in the operating reserve fund, debt service reserve fund or repair and replacement fund during that time, according to the EMMA posting.

At fiscal year’s end 2025, the debt service coverage ratio for the Series 2021 bonds was negative 1.4, and there was 28 days cash on hand, according to a statement posted to EMMA by the then-chair of Roycemore’s board of trustees.

Roycemore is currently open for summer programming. It has not disclosed plans beyond the 2026-27 school year.

But the announcement from its board of trustees that Roycemore would suspend operations for the upcoming school year came amid a cavalcade of controversies that included repeated leadership changes; a plea for $675,000 to finish the 2025-26 school year; calls from parents for the removal of the board of trustees; plans to sell the school’s campus or merge with another school; crowdsourced fundraising campaigns; and the resignation of the interim head of school after one month, according to a timeline compiled by Evanston Roundtable.

A spokesperson for Wilmington Trust said the firm has no comment. 

The external counsel for the trustee, Greenberg Traurig, did not respond to a request for comment.

A Roycemore employee reached by phone said Roycemore does not currently have a CFO or interim head of school, and referred all questions to Dr. Anita Shah, who is presently listed on Roycemore’s website as chair of the board of trustees.

By email, Shah declined to respond to questions.