As long as the orphanage is registered to the previous director, he's going to have problems. His options are:
1) Pay the debt [lump sum or installments; why doesn't the government get involved?]
2) Make the old guy indebted to him [to either cancel the debt or extend the deadline, which is the case now]
3) Make an entirely new orphanage and register it to his own name with the king [which is a bit complicated]
4) Kill everyone, salt the earth, and nuke the site from orbit [it's the only way to be sure]