Dive Brief:
- Paul Lalljie is stepping down as 2U’s CEO, the company announced Friday, just weeks after it emerged from Chapter 11 bankruptcy. Lalljie will also leave his board seat, the company confirmed.
- The online program manager’s board has started a search for a new permanent chief executive. In the meantime, CFO Matt Norden has been appointed interim CEO. The CEO transition is effective immediately, according to the company.
- Lalljie served as chief executive for less than a year, after succeeding 2U co-founder and longtime CEO Chip Paucek in the role.
Dive Insight:
Lalljie’s exit from the chief executive spot comes as 2U tries to right its path after a fast trip through bankruptcy that allowed it to shed over half a billion dollars in debt, as well as leases and other financial baggage.
“With our financial restructuring now complete, Paul and the Board have agreed that this is the right moment for a change as 2U enters its next phase of growth,” Brian Napack, executive chair of 2U's board, said in a statement.
Lalljie took over at a time of mounting financial pressures on 2U after previously serving as the company’s CFO. When he stepped into the chief executive spot, 2U was looking to strengthen its operations and become profitable after a long history of losses.
His rise to CEO also came just after the company announced a breakup with one of its oldest and largest clients, University of Southern California, on most of the programs they collaborated on.
As other universities parted ways with 2U and demand declined amid a waning pandemic, the company’s revenue fell from highs of a few years ago. In July, its projections for fiscal 2024 revenue of $733 million were over $40 million below what the company made four years ago in 2020.
At the same time, it was saddled with more than $900 million in debt, much of it taken on to buy the MOOC platform edX in 2021.
The financial stress ultimately led 2U to file for Chapter 11 in July with a deal already ironed out with major lenders. It made a speedy journey through the legal process, emerging Sept. 13 as a private company, with unsecured bondholders trading out their holdings for equity in the restructured company.
Lalljie said in a statement at the time, “At the outset of this process, we committed to emerge as a stronger company, and that is exactly what we have done.”
When 2U emerged from bankruptcy, it announced that Napack, former CEO of the academic publisher Wiley, would serve as executive chair of the reorganized company.
Norden will also continue in the CFO role while the company searches for a new permanent CEO.
