Representatives of the Lon Morris bankruptcy estate announced Wednesday in a news release that they are asking for approval from federal Judge Bill Parker to distribute $130,000 to former employees who were not paid in the weeks leading up to the school’s closure.
In the motion, filed Wednesday in the U.S. Bankruptcy Court Eastern District of Texas, representatives requested a hearing to present evidence for why 138 former Lon Morris employees should get the cash, the release states.
“We’re hoping the court will allow us to distribute these funds before the holidays as we continue to work to increase the value of the estate and make sure workers are paid all the wages they’re owed,” Dawn Ragan, the estate’s chief restructuring officer, said in a prepared statement. “These men and women missed three payroll periods covering six weeks of work because they supported Lon Morris’ Christian charitable mission to provide education for young people. We believe they deserve this payment.”
Houston Attorney Hugh Ray III, who represents the Lon Morris bankruptcy estate, said the school always worked with the other Christian charitable portions of the Methodist church, and the affiliated Methodist charities from time to time would receive money for the benefit of Lon Morris.
“They want to do what they can within the constraints of their mission, and we as debtors want to get our former employees what we can within the constraints of bankruptcy code,” he said. “These employees sacrificed time for the college’s mission and worked without pay and are owed money. It is my job to get them paid. That is our mission as the bankruptcy team to pay the former employees.”
Ray said the employees previously received about $200,000 after the bishop of the Texas Annual Conference of the United Methodist Church made a humanitarian appeal to churches. According to court documents, there is still about $369,000 owed in unreimbursed priority wage claims, which does not include claims of the former Lon Morris president.
After negotiation, the foundation and estate agreed that the foundation will be able to provide $130,000 for former employees plus $7,000 for bankruptcy estate-related expenses, according to a news release.
“Given the lack of documentation from prior administrations at both Lon Morris and UMHEF, this is absolutely the best resolution for the former employees and the school’s estate,” Ray said in the release. “We have one Christian charity saying that it wants to make sure the employees of another Christian charity are paid for their work in carrying out the charities’ shared mission, and I truly believe this request should be honored.”
Representatives of the estate asked the court to set a hearing on Dec. 20. Ray said they hope and expect the item will be considered on that day or before and that they can get checks to employees the next day if it is approved.
“People should know that Dawn (Ragan) is intending on distributing checks … to employee claimants before Christmas and will do what she can to get the checks to them before Christmas (if approved),” he said.
Tom Dullard, who taught at Lon Morris and now teaches in New Summerfield ISD, said he would be grateful to have the money, and it would have an enormous effect before Christmas.
He said he has been fortunate and was able to catch up on his car and house payments, and he hopes other employees who didn’t have the same opportunities can benefit.
Amanda Chesshir, who served as an assistant professor of speech at Lon Morris, agreed, saying, “Obviously that would be a great thing that would still be a small portion of what employees are owed. That would be very good. That would be very helpful to be able to keep the money we’ve already earned.”
The recent motion is the latest in Lon Morris’ bankruptcy proceedings.
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 said 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. Ray has 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 other East Texas community colleges have stepped in to help accommodate them.
Ray said the recent motion has no impact on a scheduled auction of Lon Morris assets set for Jan. 14 in Dallas. According to a news release, the auction will include about 50,000 square feet of lecture space, dormitory buildings, a technology center, a gymnasium, and fields for football, baseball and other sports. A detailed auction listing is online at www.ameribid.com.