Posted 12:20 am Thursday, November 01, 2012
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Property marketed for cash only and noncredit bidding
BY KELLY GOOCH
kgooch@tylerpaper.com
Lon Morris College buildings will be marketed in the coming weeks to state universities and other potential buyers as the iconic institution prepares for an auction.
kgooch@tylerpaper.com
Lon Morris College buildings will be marketed in the coming weeks to state universities and other potential buyers as the iconic institution prepares for an auction.
On Wednesday morning, Judge Bill Parker in the United States Bankruptcy Court Eastern District of Texas authorized Lon Morris to employ AmeriBid LLC as the auctioneer.
Lon Morris College, which has faced serious financial struggles in recent years, filed an application Oct. 25 in bankruptcy court, requesting the authority to employ AmeriBid, which will sell “a substantial amount of the property” of the Jacksonville estate. Lon Morris initially wanted to employ Tranzon Auction Resolutions, but that application was withdrawn.
Lon Morris “is proposing a plan that encompasses an auction of the secured and unencumbered property at the core of the campus as a whole,” attorneys write in the application to employ AmeriBid. “The auction as a cash-only, noncredit bid auction should create a mechanism by which the free market values the assets and gives the greatest recovery to the unsecured creditors.”
The auction will be conducted using two categories — one for core assets, meaning property that is essential for an education facility such as dorms and the theater, and another for noncore assets, primarily single-family residential properties around the college, Brent Wellings of AmeriBid said.
As far as the rodeo arena, which the City of Jacksonville deeded to Lon Morris in 2009, the school has agreed it will not sell the property without the city’s consent, attorneys said. Lon Morris agreed to give The Lodge, a student housing facility that opened last year, back to Tilley LLC. It also agreed in September to a foreclosure on the historic Landmark Building, which was used for the school’s Hospitality Administration Program.
A target date for the auction is mid-December, and a marketing campaign comprised of things such as advertisements, news releases and signage is expected to begin in the next 10 days.
What’s “exciting for the community is there is a great opportunity for local investors to participate on the noncore assets. … Obviously it’s a very important sale to Jacksonville. We really want … to have the community on our side and to have the collaborative approach,” Wellings said.
Wednesday’s hearing is among the latest issues for Lon Morris.
Lon Morris “is proposing a plan that encompasses an auction of the secured and unencumbered property at the core of the campus as a whole,” attorneys write in the application to employ AmeriBid. “The auction as a cash-only, noncredit bid auction should create a mechanism by which the free market values the assets and gives the greatest recovery to the unsecured creditors.”
The auction will be conducted using two categories — one for core assets, meaning property that is essential for an education facility such as dorms and the theater, and another for noncore assets, primarily single-family residential properties around the college, Brent Wellings of AmeriBid said.
As far as the rodeo arena, which the City of Jacksonville deeded to Lon Morris in 2009, the school has agreed it will not sell the property without the city’s consent, attorneys said. Lon Morris agreed to give The Lodge, a student housing facility that opened last year, back to Tilley LLC. It also agreed in September to a foreclosure on the historic Landmark Building, which was used for the school’s Hospitality Administration Program.
A target date for the auction is mid-December, and a marketing campaign comprised of things such as advertisements, news releases and signage is expected to begin in the next 10 days.
What’s “exciting for the community is there is a great opportunity for local investors to participate on the noncore assets. … Obviously it’s a very important sale to Jacksonville. We really want … to have the community on our side and to have the collaborative approach,” Wellings said.
Wednesday’s hearing is among the latest issues for Lon Morris.
The financially-strapped institution filed a voluntary chapter 11 bankruptcy petition in July after bleeding millions of dollars since at least the 2007-08 school year, when college representatives say the school embarked on a costly plan to grow enrollment.
In August, the college learned it would lose federal student aid and subsequently decided to suspend the fall semester. Lon Morris Attorney Hugh Ray III said that changed the nature of the case, which went from selling an operating facility to instead auctioning its assets as real estate.
About 100 students were expected to attend Lon Morris this fall, and now other East Texas community colleges have stepped in to help accommodate them.
Per its responsibility to protect charitable assets, the Texas Attorney General’s Office also is now investigating how $1.3 million in a restricted gift was spent by Lon Morris, the agency confirmed last week.
The funds in question are from the Long Endowment, which specifies that if Lon Morris College closes, the main library at Sam Houston State University in Huntsville becomes the beneficiary.
Attorneys for the bankrupt college reviewed minutes from the college’s Board of Trustees in 2010 and 2011, and there is no apparent reference to the endowment in the 2011 minutes, “except a fleeting reference in the January 2011 minutes, which indicate that the Long Endowment will make a regular distribution for the (Lon Morris) library,” according to court documents.
The will and testament of James D. Long, who died in 2009, states that Lon Morris could invest the donation how they choose, but for the first 50 years, half of the income should be used exclusively to purchase books and journals for the Lon Morris library, and “to modernize library services and improve student access to library resources.”
In August, the college learned it would lose federal student aid and subsequently decided to suspend the fall semester. Lon Morris Attorney Hugh Ray III said that changed the nature of the case, which went from selling an operating facility to instead auctioning its assets as real estate.
About 100 students were expected to attend Lon Morris this fall, and now other East Texas community colleges have stepped in to help accommodate them.
Per its responsibility to protect charitable assets, the Texas Attorney General’s Office also is now investigating how $1.3 million in a restricted gift was spent by Lon Morris, the agency confirmed last week.
The funds in question are from the Long Endowment, which specifies that if Lon Morris College closes, the main library at Sam Houston State University in Huntsville becomes the beneficiary.
Attorneys for the bankrupt college reviewed minutes from the college’s Board of Trustees in 2010 and 2011, and there is no apparent reference to the endowment in the 2011 minutes, “except a fleeting reference in the January 2011 minutes, which indicate that the Long Endowment will make a regular distribution for the (Lon Morris) library,” according to court documents.
The will and testament of James D. Long, who died in 2009, states that Lon Morris could invest the donation how they choose, but for the first 50 years, half of the income should be used exclusively to purchase books and journals for the Lon Morris library, and “to modernize library services and improve student access to library resources.”
Court documents further state that based on Lon Morris’ books, the money was borrowed “as of” 2010, but a promissory note for the $1 million that was borrowed is nowhere to be found.
Attorneys have requested board minutes, emails and documents related to the endowment.
Former Lon Morris president Dr. Miles McCall was examined last week by attorneys about how funds were used, and Auditor Lynn Acker of Acker & Co. is scheduled to be examined today.
Ray said attorneys for the college also are conducting a parallel investigation in close connection with the Attorney General’s Office investigation, and once they know the facts, they will take action.
Lon Morris Chief Restructuring Officer Dawn Ragan said the college is not aware of any missing money, but is focusing on the question: “Did the school use funds appropriately?”
Ray has said he does not want to comment on the ongoing investigation or any evidence or conclusions related to it until it is complete. He believes he will know something in mid-November.
Attorneys have requested board minutes, emails and documents related to the endowment.
Former Lon Morris president Dr. Miles McCall was examined last week by attorneys about how funds were used, and Auditor Lynn Acker of Acker & Co. is scheduled to be examined today.
Ray said attorneys for the college also are conducting a parallel investigation in close connection with the Attorney General’s Office investigation, and once they know the facts, they will take action.
Lon Morris Chief Restructuring Officer Dawn Ragan said the college is not aware of any missing money, but is focusing on the question: “Did the school use funds appropriately?”
Ray has said he does not want to comment on the ongoing investigation or any evidence or conclusions related to it until it is complete. He believes he will know something in mid-November.
