1. The Rent Table

In Oregon, the notification arrived on a Sunday afternoon: by email, parents learned that their school effectively no longer existed. In Wisconsin, a father drove his five-month-old son to a Guidepost Montessori and found it closed. Both scenes are from Claire Suddath's reconstruction of the collapse for The New York Times (13 Sept 2026).

For the parents at those two buildings, the failure arrived as a surprise. The reason lived in the company's own numbers for five years, and nobody outside the company had the table; it reached the public record only in June 2025, in a table inside a sworn declaration. (Suddath's reporting is quoted here from its Ravitch and HeadlinesBriefing reprints; the Times page itself is walled — the origin of the reporting, never a page read.)

That table sits in paragraph 78 of a first-day declaration. It reports rent as a share of operating revenue: 60.3 percent in 2020, 48.9 percent in 2021, 39.9 percent in 2022, 39.1 percent in 2023, 37.5 percent in 2024, and 38.4 percent through April 2025. The declaration supplies its own comparison: competitors in early childhood education typically operate with rent closer to 20 percent of revenue. Guidepost's final partial year ran at nearly twice that. It began at three times. The declaration is that of Jonathan McCarthy, Interim President and Secretary of Higher Ground Education, Inc., filed on 18 June 2025 under Case No. 25-80121-mvl11 in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (McCarthy First-Day Decl., Doc 15 ¶78).

Then comes the sentence that explains the structure, and it belongs to the sworn record rather than to any reprint of it. Rent costs were high, McCarthy wrote, because of "above-market rents, driven by lease incentives (i.e., capital contributions from development partners offered in exchange for higher rents)" (¶78).

The sentence sounds, at first, like an inversion of the way the story is usually told. A lease incentive is ordinarily what a landlord pays a tenant to sign — a fit-out allowance, a construction contribution, key money. In these leases the money came from parties the declaration calls development partners, in exchange for a higher rent. The sound misleads: an ordinary incentive is also money at signing recovered through rent over the term, and repayment through rent is what an incentive is. The advance was not a gift. It was capital priced into the lease, and the lease at the end was long: as of 30 April 2025, the declaration reports approximately $610,971,888 in long-term lease liabilities, against a weighted-average remaining lease term — before the foreclosures — of approximately sixteen years (¶78). Those figures are the size and duration of the obligation to keep paying rent, not a tally of the advances, whose total the declaration never states.

Each new school produced cash at signing and losses at operation, and part of the cash at signing was lease-side money — capital contributions from development partners, offered in exchange for rents set above market (¶78). The rent that came due later was what the money had cost. And not all of the lease-side money ever reached the debtors as free cash: the declaration records a Construction Vendor Account that "receives funds from a landlord, which are then used to pay construction vendors for improvements on a lease on which the Debtors are tenants" (¶127).

The declaration summarizes the capital stack in its own words. In paragraph 56, McCarthy states that since 2020 the debtors raised over $335 million "through various debt and equity instruments, including EB-5 capital and lease incentives," and spent it opening schools and running the platform (¶56). In paragraph 57, he states that "the Debtors' business has never had positive cash flows from operations"; paragraph 60's table of losses from operations runs to $445,123,673, fiscal 2020 through April 2025 (¶57; ¶60). These are the numbers of a company that was not intermittently unprofitable; it was continuously so — no positive operating year in the table, no positive operating cash in its history — even in fiscal 2024, when the loss from operations ran about half of fiscal 2022's on much higher revenue (¶60).

They are also sworn figures from an interim insider, and the declaration is not an audit: McCarthy was appointed after the officers resigned, and it discloses his firm's own equity and creditor position and his abstention from board decisions touching it. The limitation stands, and it does not weaken the table: the rent figures are the Debtors' sworn testimony, offered in a first-day declaration to show a court why relief was needed — the company's own account of its own rent. Guidepost's auditor, for its part, had been emphasizing the same facts since 2021 — recurring losses, negative working capital, cash outflows — and had qualified its fiscal 2023 opinion as to going concern (¶60 n.23).

The people holding pieces of this arrangement will not describe it the same way. The parents who paid tuition and deposits hold an email. The teachers who worked inside it found a name for the mechanism. The founder has already opened another school, with his wife — Fulcrum, a converted ranch-style house outside Austin, Texas, their children among the students (as captured in the HeadlinesBriefing reprint). Around those people, the arrangement has two parties who never appear at a door: the EB-5 investors, non-U.S. persons who held limited minority interests in the school subsidiaries the declaration's own footnote names (¶18; ¶53 n.21), at one far end of the chain; and the counterparties who offered their capital in exchange for higher rents — the one party to this structure that was not buying an education, and the party the sentence in paragraph 78 is actually about. The declaration calls them development partners, not landlords; where this account says landlord, it is reading the rent backwards, toward the party whose advance the rent was repaying.

The question this account follows is narrower and harder than whether the Montessori classrooms were real, or whether ambition curdled into miscalculation: who was actually financing the Montessori classroom at drop-off each morning — and what did the financing cost each of them, in the Sunday email, at the locked door, in the lease amendment, and in the bankruptcy filing, when it was finally called?

2. Growth Was the Arithmetic

The declaration begins with something more basic than the money: a count. By the fall of 2024, it states, the debtors were "the largest owner and operator of Montessori schools in the world with over 150 schools in operations and plans for the construction and opening of dozens more schools" (McCarthy First-Day Decl., Doc 15 ¶16). The same paragraph spreads them across the country — Texas, California, New York, Illinois, Massachusetts, Florida, Virginia, among other states — and adds a virtual school, a home school, a teacher-training program, and content licensed to independent partners. Then comes the closing number: "However, and as discussed herein, the Debtors owned and operated seven (7) of the Schools as of the Petition Date" (¶16). More than a hundred and fifty schools in operation that fall; seven owned and operated at the petition the following June. The paragraph does not narrate the distance between its own two sentences. The rest of the declaration does, and the remaining sections of this account will.

That fall is also where the declaration stops counting schools and starts counting money. Several schools were "incurring losses of over $50,000 per month" (¶61). The committed development pipeline held "over 20 additional campus openings," each generally expected to require "$1,000,000 or more in future capital to reach breakeven" (¶61). The platform itself — the corporate cost of running Guidepost, whatever any single classroom did — carried "monthly corporate G&A expenses in excess of $2,500,000" (¶62). And when the debtors undertook restructuring initiatives "to improve financial performance, to boost liquidity and right-size their businesses," those initiatives "did not yield sufficient financial changes in the necessary timeframe to prevent the Foreclosures and avoid these Chapter 11 Cases" (¶62).

The rent table and those figures answer different questions. The table's ratio falls as the chain ramps — 60.3 percent in 2020 to 37.5 in 2024 — but toward a floor still nearly twice the industry's comparison, and the absolute rent bill rose every year underneath it, $24.4 million in 2020 to $72.1 million in 2024 (¶78), as the lease book grew with the chain. Those other figures show where the cash burned instead: campuses losing more than $50,000 a month, committed openings waiting on $1,000,000 or more to reach breakeven, overhead above $2.5 million a month regardless. Each advance raised the rent on the campus it funded and on no other campus. And the need grew with the lease book: operations had never produced cash (¶57), so outside money had to keep arriving — the over-$335-million stack (¶56), its lease-incentive share never broken out — and every contribution that arrived carried its own rent behind it. The growth-at-all-costs reading and the idealism-betrayed reading both miss what the columns have in common. Growth was the arithmetic of staying open: the single direction in which the company could move and still appear healthy, month after month, for as long as someone would keep advancing money at signing.

From the outside, scale read as health. Suddath reported that the schools "appeared to be successful, with 150 locations that served tens of thousands of children," and that the failure stood out even against the notorious record of for-profit education ventures: "Schools close sometimes, but usually not this many, and not all at once," as Rebecca Winthrop, who directs the Center for Universal Education at the Brookings Institution, put it to her (as reprinted by Ravitch, 14 Sept 2026).

The founder had announced the destination before any of it happened. Suddath's reconstruction opens ten years back: "a Montessori enthusiast named Ray Girn had a vision," one aimed at "high-quality, child-led education to as many babies and toddlers as possible," delivered by "a chain of for-profit schools that would grow at the pace of a tech start-up." He "spoke about doing for preschools 'what ride-sharing apps or Airbnb have achieved,'" and he raised $335 million from investors, including venture capital and private equity firms — Suddath's count, investor-side. The declaration's own count is different in kind: over $335 million since 2020, raised through instruments that include EB-5 capital and lease incentives (¶56). The figures rhyme; nothing shown makes them the same money. Suddath also reported that Guidepost was not the first school chain Girn had run at an unsustainable pace (as reprinted by Ravitch, 14 Sept 2026).

He was still describing it that way when it was over. Suddath reported that Girn adamantly disputed the comparisons his former staff had drawn, and that he is proud of what he built. "You can't care about the people that are critics," he told her. "We're not apologizing for this" (as captured in the HeadlinesBriefing reprint). The conversation ran for hours, ranging from Julius Caesar and Plato through the founding fathers, environmentalism, Bismarckian Germany, and Taylor Swift.

What the sworn figures add is the direction of travel: a chain that grew like ride-sharing paid rent at nearly twice the industry norm, and a company that had never turned a positive operating year (¶60) grew anyway, at the pace of a tech start-up, for as long as new capital kept arriving at signing.

3. The Other End of the Advance

Paragraph 56 names the funding stack: since 2020, the debtors raised over $335 million "through various debt and equity instruments, including EB-5 capital and lease incentives" (McCarthy First-Day Decl., Doc 15 ¶56). The lease incentives were the development partners' advances — capital at signing, repaid as above-market rent. The EB-5 capital ran to a different end of the chain: immigrant investors, non-U.S. persons in the declaration's words, whose limited interests sat inside the school subsidiaries.

The declaration explains the program sparely. Under the Employment Based Immigration Preference program, known as EB-5, investors "may be able to gain permanent residence in the United States by investing the required minimum amount of capital in a domestic commercial enterprise that will create a specified minimum number of full-time jobs" (¶53). "The Debtors' EB-5 Program was related to the opening of specific Schools and the job creation coming from those Schools," McCarthy states (¶53). From 2017 to the Petition Date, that program "raised approximately $50 million from EB-5 Investors," proceeds the declaration assigns "for general purposes" (¶53). The school subsidiaries that used it were "majority-owned by Guidepost A with the minority owners consisting of limited interests owned by non-U.S. person investors" (¶18), and a footnote lists more than twenty of the debtor entities that did (¶53 n.21), from Guidepost Birmingham to the corporate shells named HGE FIC Q.

So the immigrant investor occupied the far end of the same structure as the landlord. For the landlord, the return was rent, priced above market. For the EB-5 investor, it was a limited minority stake in a named school subsidiary (¶18, ¶54), inside a program whose design tied the investment to the opening of specific schools, the jobs those schools would create, and the possibility of permanent residence (¶53). And the company those stakes sat inside had never once produced a positive operating year (¶60).

Inside the company, the people nearest the classrooms had a name for what they were watching. Suddath's reconstruction reports that more than two dozen former teachers, administrators and corporate employees told her they were deeply concerned by the business model (as captured in the HeadlinesBriefing reprint of 13 Sept 2026). One of them, Alex Richardson, a teacher at Guidepost's first school, in Orange County, California, said it plainly: "We were calling it the Montessori Ponzi scheme internally" (as captured in the HeadlinesBriefing reprint). Ray Girn adamantly disputed that comparison and said he is proud of what he built. The word is theirs, not the court's: McCarthy's declaration never uses it, and nothing here treats it as a finding. It is what the staff called the model, reported and not adjudged. What the record contains is the rent.

The pipeline's end is in the record too, and the record files it as a board decision rather than a collapse. On 26 July 2024, the Board, recognizing "the massive Rent Costs, payment obligations, and the remaining long-term Lease liabilities," executed a unanimous written consent to "immediately stop all rent payments for the Leases beginning in August 2024" and to open negotiations with its landlords — the Lease Restructuring (¶79). In September 2024 the company retained Keen-Summit Capital Partners to assist with the restructuring (¶79).

The restructuring offered the landlords a menu: rent deferrals, rent abatement, longer lease terms, and "application of amounts owed to the Debtors under the Lease (i.e., TI budget, startup capital, etc…) towards the unpaid rent" (¶80). That last item is what it says: money the landlords still owed the schools — tenant-improvement budget, startup capital — set against rent the schools had stopped paying. The declaration records the option; it does not say how often the roughly 120 amendments used it.

No landlord speaks in this record; the declaration names development partners, none of them individually. What the other side would say has to be constructed rather than quoted, and it is worth granting in full: the developer knew what it was pricing, and accepted the premium for its own reasons. That is granted here as assumption; the record never names one.

The company's real estate team engaged over 100 landlords; approximately 120 lease amendments were executed, "representing the vast majority of the Debtors' Leases" (¶80). The declaration calls the restructuring a success. Paragraph 81 qualifies it: the restructuring "provided short-term benefits for the Debtors' cash flows," but "ultimately was not sufficient to offset ongoing losses"; even with the savings, the company could not reach positive cash flow from operations; the deferrals were temporary, with deferred rent on continuing operations "becoming payable in September 2025"; and for dozens of other campuses, "the Debtors have not been paying rent for months and are in default thereunder" (¶81).

The rent did not come due because the model failed. It came due because the arithmetic never had another direction: part of the money that opened the schools became the rent that outlasted them, and when the board stopped paying in August 2024, the amendments bought time — short-term benefits, the declaration says — that were ultimately not sufficient to offset ongoing losses (¶¶79–81). What remained on the books was the capital, spent; the rent it had bought, unpaid; and an investor class at the other end of the chain, whose roughly $50 million the declaration accounts to "general purposes" (¶53). The advance had two ends, and the record sets no single date for their meeting. The deferral clock said September 2025, when the deferred rent on continuing operations was to become payable (¶81). The defaults ran faster: dozens of campuses were already months in default (¶81) when the petition arrived on 18 June 2025. The filing did not wait for the deferral clock to run out.

4. Aftermath

The court file records an aftermath rather than an ending: a plan confirmed 26 November 2025, a liquidating trust under John P. Madden administering what remains, and a September 2026 hearing — a motion to enforce the plan's injunction against California plaintiffs, recorded as granted in part, with an order entered days later captioned as granting (docket captures; the claims-agent's numbering differs from the docket's, and nothing here rests on the difference).

At drop-off, none of that paperwork is visible. A parent sees a school, a promise, a monthly charge — and, in Oregon, an email on a Sunday afternoon; in Wisconsin, a locked door on a weekday morning. Those two buildings opened this account, and they close it. The classroom could be earnest and the instruction real. The parent at the door was paying, every morning, into the revenue the rent drew on.