In January 1994, SACS informed Sherman the college was being removed from its list of accredited institutions for failing to meet financial requirements. Sherman appealed that decision on April 25, 1994, but SACS upheld its initial decision and placed Sherman on probation until the end of the school year (June 17, 1994). Probation status prohibited Sherman from enrolling or recruiting new students.
In his decision, U.S. District Court Judge Henry Herlong Jr., noted that the potential injury to Sherman was enormous if a preliminary injunction relief was denied, and that without SACS accreditation, Sherman would "certainly cease to exist." As such, the judge deemed the "balance of hardship tips distinctly in Sherman's favor."
While Judge Herlong asserted it was in the public interest for SACS to be allowed to perform its duties, he also affirmed it was in the public interest to protect Sherman's 144 students during the course of the accreditation lawsuit; that the students' lives would be "significantly interrupted if the court denies Sherman's motion for a preliminary injunction."
The court also stated it was "unclear whether SACS has any concrete criteria for determining financial stability."
The judge concluded: "Because the balance of hardships tips so decidedly in Sherman's favor, and serious and substantial questions have been raised as to the merits of the case, the court is constrained to grant the preliminary injunction that Sherman seeks. This ruling should not be taken as any indication of the court's opinion as to the merits of the case."
Judge Herlong ordered that "Sherman be reinstated to the position it was in prior to April 25, 1994."
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