Posted 10:57 pm Wednesday, February 13, 2013
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Bankruptcy plans for Lon Morris confirmed
In what is described by one person as "the burial of an old college," a federal judge confirmed a final bankruptcy plan for Lon Morris College, the bankruptcy estate announced Tuesday.
The confirmation, which took place after last week's hearing, essentially guarantees money for unsecured creditors and payment for employees, said Attorney Hugh Ray III, who represents the Lon Morris bankruptcy estate.
Ray said secured lenders are taking a significant loss on their collateral, and because the estate negotiated, it was able to guarantee money for unsecured creditors. Without that negotiation, he said there would have been a foreclosure, and unsecured creditors wouldn't have received anything.
"This is an important step in satisfying Lon Morris College's debts and ensuring former employees are paid for their work in furtherance of the school's mission," Ray said in a news release. "Much credit goes to (bankruptcy estate Chief Restructuring Officer) Dawn Ragan for her work with creditors and foundations to get this plan confirmed, and to Judge (Bill) Parker for his patience and direction during this process."
Ms. Ragan added in the news release, "We always believed that a workable plan could be achieved based on the shared goals of all parties involved. We could not have accomplished what we did without the support of many people, including the few remaining employees who are continuing the school's charitable mission."
Lon Morris, the state's oldest junior college, 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.
In December, bankruptcy Judge Bill Parker gave the go-ahead for the Lon Morris bankruptcy estate to distribute $130,000 to former employees after the estate negotiated with Nashville-based nonprofit United Methodist Higher Education Foundation. Before that, Ray has said the employees received about $200,000 after the bishop of the Texas Annual Conference of the United Methodist Church made a humanitarian appeal to churches.
And Ray said last week that Heartspring and Texas Methodist foundations also had presented to their boards for approval a plan to pay former employees $500,000, which was expected to be approved.
Tom Dullard, who taught at Lon Morris and now teaches in New Summerfield ISD, said Tuesday that he has likely received about $1,500 so far and will be pleased to get more of what he's owed.
"Everybody's going to be happy to get something. We've been waiting a long time," he said.
The bankruptcy estate also worked with the company AmeriBid on last month's auction, which resulted in purchases by Jacksonville ISD, according to a news release.
The district announced Friday that trustees approved the $1.53 million purchase of the gymnasium, administration building and more than 50 acres of land. That includes 10 acres around the gymnasium as well as about 40 acres in the area of the baseball and softball fields.
Jacksonville ISD was a high bidder in the auction as was local office supply company 11 x 17 Inc., which bid on most of the school's academic buildings, the chapel and dormitories, according to a news release. Ray anticipates that closing will occur later this month.
As for now, he said the bankruptcy estate will wrap things up by collecting assets to distribute to creditors, but the college will no longer need to administer its assets in Jacksonville.
"We've been authorized to sell substantially all of the Jacksonville real property. On the horizon is attempting to get money from others for the benefit (of) remaining creditors," he said. "All the creditors now know how we will be pursuing assets and that we will hopefully make a distribution to give them some of what they are owed to the best of our ability."
Ray said there is a Jacksonville building that hasn't sold -- the Cooper House, a former
duplex-style residential housing unit -- as well as mineral interests.
According to a news release, financial recoveries are expected to be several million dollars with liquidated claims, asset sales and insurance policy collection.
"This is the burial of an old college that has been through civil wars and cold wars. It's a sad and somber thing," Ray said.
Although the situation is sad, it also has been a blessing for New Summerfield ISD, Dullard said.
He said several former Lon Morris employees now work in the district, and this summer, five different people from Lon Morris likely will be teaching there.
He said students also are getting prepared to start dual-credit courses in the summer and fall.
"Everybody's gone on with their lives," Dullard said, adding that one former Lon Morris employee sold her house and moved to the Hill Country. "Everybody's going different ways."
He said he hopes that Jacksonville provides more opportunities for former Lon Morris employees in the future.
