Shinn knew when to cut school.

• Position: George Shinn & Associates sues Phillips Colleges Inc. over delinquent interest payments on school buyout

It looks as if the folks who bought George Shinn's business schools should have done a little more homework.

Shinn, owner of the Charlotte Hornets, bought his first four schools in 1972 with $20,000 down, using his mother's house as collateral [cover story, January 19901. Seventeen years and 21 schools later, Phillips Colleges Inc. of Gulfport, Miss., bought Rutledge Educational Systems. The purchase price? Around $30 million, of which $20 million was cash. One year earlier, the Rutledge schools reported peak enrollment of about 7,700 students, says Buck Lattimore, who spent 14 years with Rutledge.

By early 1991, Phillips had closed or consolidated 12 of the schools, including four in North Carolina, spokeswoman Virginia Shanteau says. She insists those changes were good business moves and all is well with the chain, which enrolls 50,000 students at 78 schools in 30 states.

If that's so, then why did George Shinn & Associates have to file suit in Charlotte's...