Daily Progress, Jacksonville, TX

October 12, 2012

Lon Morris attempts to garner funds to pay employees

Jo Anne Embleton
Jacksonville Daily Progress

Tyler —  Former Lon Morris College employees may have a shot at seeing unpaid wages granted to them, thanks to a document filed by the school's representatives that seeks information about “millions of dollars in which the college has beneficial interest” from several charitable foundations.

 LMC attorney Hugh Ray III appeared in United States Bankruptcy Court/Eastern District Oct. 10 to give the judge “an overview of where we are in the case,” said Dawn Ragan, chief restructuring officer for Bridgeport Consulting.

“We are trying to get additional information and documents to see what additional monies the school is entitled to, based on our current status,” she said.

The funds are gifts from donors specifically for Lon Morris, which are managed by the foundations for use by the college.

 “Sometimes (gifts) are restricted, sometimes not, but we don't always have information,” Ragan said. “We want to see what additional funds may be available to assist in paying creditors and specifically, paying unpaid employee wages.”

 Former LMC head athletic trainer Jason Thomas, who was employed by the college for three years and “without a paycheck from April until May,” said he thinks unpaid wages “should have been a top priority.”

“I think they need to do whatever they can to pay the former employees the monies that are owed for our work and time. I'm still trying to recover financially from no pay for a month and a half, then being let go mid-summer,” he said.

Ragan said that of the $385,000 priority wage claims,  $369,000 are employee wages, while approximately $250,000 of the $2 million general unsecured claims are employee wages.

The school wants to “find out what gifts are restricted or unrestricted, and if they're restricted, we want to know for what purposes,” she said.

Wednesday's court appearance is the latest chapter in the college's woes.

Last May, LMC hired Bridgepoint Consulting to restructure its large amount of debt, but in July, the college filed for Chapter 11 bankruptcy and hired Capstone Parters LLC to help facilitate a transaction with another educational institution or strategic partner.

Capstone later suspended its efforts, but agreed to change its agreement with the college to act as a buyer's broker, which represents a buy to find property and help it through the purchase.

In August, the Department of Education suspended the school's Title IX status, revoking LMC's the privilege of participating in HEA programs, which allowed the college to disburse federal funds and federal student aid such as Pell Grant, Teacher Education Assistance for College and High Education grants, federal work study and direct loan programs.

The school filed documents in late September in the federal bankruptcy court in Tyler seeking permission to liquidate all of its assets, including building and properties in a cash-only option. A hearing is scheduled for 9:30 a.m. Oct. 31 where the judge can approve, deny or amend the college's request.

According to court documents, liens have been filed by Amegy Bank, N.A., the Scurlock Foundation, Austin Bank and Texas National Bank.

In its application to the bankruptcy court, LMC requested the hiring of Tranzon Auction Resolutions to serve as auctioneer for the proposed auction, and the college proposed three auctions to ensure maximum value for the properties.

The first proposed step of the liquidation is a sealed bid auction, with bids due by Nov. 13. The second step is a proposed Nov. 15 live auction of the properties.

If there are no bids on the personal property in the auctions, the school proposes to sell it in an internet auction on Nov. 27.