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Webster University can move forward with plans to reclassify $34.4 million in restricted endowment funds, a judge ruled last week, according to the St. Louis Post-Dispatch.
The move comes after donors dropped a lawsuit to prevent the move.
Webster, which has struggled financially in recent months, sought to lift restrictions on endowment funds to fulfill liquidity obligations for a loan agreement. Without the proper assets-to-debt ratio, Webster faced the possibility of violating the existing agreement for the loan.
If payment were demanded due to a violation of the loan agreement, it could affect Webster’s “viability,” officials have said previously, an apparent nod to the possibility of closure.
Donors initially objected to the plan, concerned about how the money would be used. Webster officials have indicated they plan to use restricted funds for their intended purpose—namely scholarships—rather than leverage the funds for operating costs amid financial struggles.
St. Louis County Circuit Court Judge Stanley J. Wallach ordered Webster to protect the reclassified funds and honor the intent of the donors, the Post-Dispatch reported. The judge also ordered Webster to keep the funds in a separate account to protect the money.
Webster attorneys told Wallach that the money will be re-restricted when possible.
