Company: LGCY
Filing Date: 2025-09-25
Form Type: 10-K
Source: 0001493152-25-014945
Chunk: 25

Company: Legacy Education Inc.
Filing Date: 2025-09-25
Form: 10-K
Item: Item 1
Chunk 25
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 the previous BDR regulations in effect prior to
July 1, 2023, generally remain in effect in the meantime and apply different substantive standards and procedures based on when a BDR
claimant’s loans were disbursed.

18

On
June 22, 2022, ED reached a settlement with plaintiffs in the case titled Sweet v. Cardona, which was filed by student loan
borrowers to challenge ED’s adjudication of BDR claims. The settlement resulted in automatic relief of claims pending as of
June 22, 2022 that were filed against institutions on a list of about 150 institutions named in the settlement agreement, which did
not include any of our institutions. In addition, under the settlement, any borrower who filed a defense to repayment claim between
June 22, 2022 and November 15, 2022 are “Post-Class Applicants” whose applications will be adjudicated under the 2016
version of the BDR regulations and will be decided by January 2026. HDMC received and timely responded to seven BDR applications
from Post-Class Applicants. CCC, Integrity, and CCMCC (at least since we acquired CCMCC) have not received any BDR applications
from Post-Class Applicants. It is possible that we could receive BDR claims in the future. If we or our representatives are found to
have engaged in certain acts or omissions under the broad definitions contained in the 2016 version of the BDR regulations, or other
BDR regulations that could be in place in the future, we could be subject to substantial repayment obligations and subject to other
sanctions.

The
enjoined 2022 version of the BDR regulations, and the versions of the BDR regulations that are currently in effect and that could be
in effect in the future, could have a material adverse effect on our business, financial condition, results of operations, and cash
flows and result in the imposition of significant restrictions on us and our ability to operate, including a requirement that our
institutions to submit a letter of credit based on expanded standards of financial responsibility. See “Education Regulations
- Financial Responsibility Standards.”

In
recent years, ED has been more active in processing BDR applications and has recently distributed claims to institutions for an opportunity
to respond to borrower allegations. ED may, on its own or in response to other constituencies, allocate additional resources to reviewing
and adjudicating BDR applications from federal student loan borrowers. We cannot