Potential purchasers spent the afternoon in negotiations and bids went up in increments. At one point, amounts such as $1.175 million and $1.275 million were on the table.
In the end, mineral interests were sold to a group of East Texas oil men for $1.375 million, Attorney Hugh Ray III, who represents Lon Morris, said.
Ray said the sale will close on Wednesday next week or before, and if that purchaser doesn’t close, then another bidder will pay $1.3 million.
If the $1.375 million sale goes through, the college will walk away with $300,000, and lender Texas National Bank, which is waiving $2.8 million in claims, will receive barely more than $1 million, he said.
“The bottom line is the college has something in the form of mineral interests in several states, and it never realized the full potential of those mineral interests when it was there operating,” Ray said. “Now that we’re here, we’ve dug up and found fields of diamonds under the corpses.”
He added, “We have found mineral interests all over the place, and we were able to turn that into money when we thought there was nothing left for the creditors.”
Selling mineral interests is one of the latest endeavors by Lon Morris since filing bankruptcy.
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,
The bankruptcy estate worked with the company AmeriBid on January’s auction, which resulted in purchases by Jacksonville ISD, according to a news release.
The district announced earlier this year 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.
Jack Webb, with 11 x 17, said last month via email that the company would like to sell the campus to an established college to use as an extension.
In the meantime, Lon Morris is still dealing with several matters, Ray said, such as potential lawsuits against the former school president and former school auditor.
Former president Dr. Miles McCall is already facing various accusations from the Texas Attorney General Greg Abbott. Lauren Bean, deputy communications director with the Texas Attorney General’s Office, said via email that McCall has until March 26 to file a response to the state’s lawsuit against him “for gross mismanagement of the college.”
When reached by phone last month, McCall repeatedly said he “can’t make any comments” in regard to the legal matters.
Additionally, Ray said the Cooper House, a former duplex-style residential housing unit, has yet to be sold.
Dawn Ragan, plan agent for Lon Morris, has said settlement discussions with the Attorney General also are still ongoing in regard to a $3.5 million Lon Morris directors and officers liability policy between charities and creditors.
Ray has said the Attorney General’s Office and the debtor are both seeking the money, and only the debtor’s money would go to creditors.