More than a quarter of the purchase value of for-profit provider BPP has been written off by its US parent company because of uncertainty surrounding the UK higher education market's future.
End-of-year results filed last month by Apollo Group with the US Securities and Exchange Commission (SEC) record $170.4 million (£106 million) in "impairment charges" as a result of a reassessment of BPP's financial outlook.
A statement accompanying the results refers to autumn enrolment levels at BPP, which focuses on business and law education, being "adversely impacted" by the economic downturn.
Apollo expects "no near-term recovery" in demand, the statement warns.
The write-off will raise questions about the long-term prospects for private providers in the UK, many of which are hoping that reforms proposed by the Browne Review will be implemented. The plans would allow private bodies to compete more freely with established universities.
BPP, which was awarded university college status earlier this year by the government, was bought by Apollo Global, a subsidiary of Apollo Group, last year for just over $600 million.
BPP recently announced plans to expand its law school, with new centres opening in Cambridge, Liverpool and Newcastle.
In its accounts filed with the SEC, Apollo says it has carried out its first "goodwill impairment test" for BPP since the takeover.
The process, which companies undertake periodically, reviews a firm's value in light of the latest market forecasts.
In a breakdown of its various subsidiary companies, Apollo - which owns US for-profit giant the University of Phoenix - says BPP's operating loss last year was almost $190 million, most of it a result of the write-off.
In a separate note on the impairment charges, the firm states: "In October 2010, BPP concluded its (autumn) enrolment period, which we believe was adversely impacted by the continued economic downturn in the UK."
The note goes on to explain that the company has "revised" its forecast for BPP because of the ongoing recession "and increased uncertainty as to when these conditions will recover".
It says it forecasts a "significant increase" in revenue over the long term from BPP University College.
However, it also assumes "no near-term recovery in the markets in which BPP operates" and "modest overall long-term growth in BPP's core programmes".
The acquisition of BPP was seen by many as a coup for Apollo. It instantly gave the US company the much sought-after prize of a provider with UK degree-awarding powers.
However, BPP's future success could be reliant on the government loosening restrictions on private providers, such as allowing their students greater access to state loans.
This winter, the coalition is expected to spell out its proposals for structural reforms to higher education, although the changes are unlikely to come into effect before the 2013-14 academic year.
Apollo says in a statement released alongside its end-of-year results that BPP will continue to be a "critical centerpiece" of its global expansion strategy.
"We continue to believe that it has significant potential both now and into the future," the statement says.