THE Catholic Church has emerged as a potential white knight for the students of debt-ridden Melbourne school Acacia College.
The Uniting Church announced on Wednesday the two-year-old independent college would close at year's end, leaving more than 500 students and 50 staff to find a new school for 2013.
The Catholic Education Office has confirmed it is in talks with the Uniting Church over the future of the school, in the city's far north.
"We have had discussions with the Uniting Church and are currently doing our due diligence and will make a further statement when this is complete," Catholic Education executive director Stephen Elder said.
The Victorian government welcomed the news, with Education Minister Martin Dixon saying he will speak with both parties.
"We believe the Catholic Education Office is very interested," Mr Dixon's spokesman James Martin said.
The government did not have the capacity to bail out the school but Mr Dixon remained determined to assist in the changeover, Mr Martin said.
"One of those ways he can assist is in speaking to the parties involved. The other is by working with parents who want their child to move to a government school."
The Uniting Church learned the school's future was in jeopardy six weeks before it revealed its plans on Wednesday.
But church moderator Isabel Thomas Dobson said parents and teachers were informed as soon as was possible.
"In an ideal world this decision wouldn't have been made and in an ideal world it would've been at a different time of the year," she told reporters in Melbourne on Thursday.
"The information and the work we've been doing (means) the timing is just now. We've informed them as soon as we can."
Ms Thomas Dobson said potential buyers contacted the church after the announcement and the church was "very hopeful" of finding a new operator.
She said nearby schools had also indicated they could open places for Acacia's displaced students.
The church had originally planned to lease the school from a developer but took on responsibility for funding the construction when the developer hit financial trouble in 2008.
She said the debt identified was "substantial" but would remain confidential.
"It would be unsustainable for the school. It would never get to the stage where it could pay off more than the interest," Ms Thomas Dobson said.
She rejected claims the church failed to do its due diligence before entering the deal.
"We did do due diligence. We've since discovered our due diligence wasn't diligent or detailed enough and it's in the last six weeks as we review other figures that we found there were substantial things that had been underestimated that has bought us to this decision."
The church's 15 other schools in Victoria and Tasmania were unaffected by Acacia's woes, Ms Thomas Dobson said.
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