From the beginning, Leoffler had a huge task before him. SMA had lost a further $79,800 between June, 1972 and January, 1973. Enrollment was down to 288 cadets. Additionally, Leoffler had to make payments on the first mortgage note that the Kables held. Leoffler had arranged for loans from two banks totaling over $750,000 to use as operating capital and had to look to repaying those notes. He began making cuts where he could while trying to raise the enrollment level. Even with his efforts, the school lost a total of $257,000 for the 1972-73 session.
There was a slight improvement in the enrollment level the next year with 308 cadets in attendance. Leoffler had mothballed North Barracks to reduce costs and had begun reducing scholarships for athletics. The school still lost $161,000 dollars in that year. The next session, 1974-75, saw a reduction of the Corps of Cadets to 238 and a loss of $252,000. Leoffler’s financial reserves were getting depleted and he was not able to make the yearly payment to the Kables. The Kables filed for foreclosure and a public sale was scheduled for July 11, 1975.
To avert this sale and allow more time to try to keep the school alive, the HIS corporation filed for Chapter XI Bankruptcy Protection on July 8, 1975. The HIS Corporation listed $2,077,000 in total assets and $1,672,762.71 in total liabilities. An Order Restraining Creditors and an Order Authorizing Debtor to Operate were granted the same day. Leoffler had averted foreclosure and sale and had bought SMA another year. On July 21, Mr. Leoffler offered up a gift totaling $740,000 to the school as a part of the Bankruptcy Reorganization Plan. The school opened for the 92nd session in September, 1975 with 172 cadets. The Kables continued to petition the court to remove the Bankruptcy Protection and allow their Foreclosure proceedings to move forward. The Judge in the Case, H. Clyde Pearson, denied all of these requests.
Leoffler continued to try work out a new repayment plan with the Kables to no avail. A plan was offered up by the Alumni Association to take over the school and it’s debts but was not approved by the Creditors Committee. Another plan to buy the school was offered up by J. Donald Allen, SMA’50. As a part of this offer, he was willing to put up $1,000,000 of his own money. This plan also was not approved by the Creditors Committee. After the graduation of 1976 and the cadets had left for the summer, Mr. Leoffler announced that the reorganization efforts had failed and the school would not reopen for the 1976-77 session. The school closed its doors as a separate education institution in Staunton on June 6, 1976. The last formal employee of the Academy was Robert Wease, the much respected Government Instructor from 1956 through 1976.