JACKSONVILLE — Lon Morris College closes
What it was that drove Lon Morris College to the brink of bankruptcy remains a mystery for now.
But it is no secret that the bankruptcy proceedings currently underway there have become an emotional roller coaster for many local residents and former employees — who believed it when they were told Bridgepoint Consulting LLC personnel had been hired to restructure the school's finances with intentions of reopening in the fall.
By the time Bridgepoint arrived at Lon Morris in May, the college was at a flashpoint. Around that time, most of Lon Morris's employees were furloughed. President Miles McCall submitted his letter of resignation.
Dawn Ragan was hired July 2 as the college's chief restructuring officer. She was selected from the Bridgepoint team working at LMC.
Supposedly, Ragan, billed by her colleagues as a "specialist in business turnaround" was going to do just that — restore the college's financial solvency.
But almost immediately, Ragan started to pursue a bankruptcy plan.
In August, this strategy led to the permanent loss of the college's Title IV funding, which it needed for access to Higher Education Act funding such as federal Pell grants, teacher education assistance, SMART grants, work study and federal student loans.
Under the law, the loss of Title IV was automatic once bankruptcy was declared. Ragan and Houston attorney Hugh Ray III, the college's counsel, fought the development tooth and nail in the court of federal bankruptcy Judge Bill Parker.
During the course of the bankruptcy, LMC estate officials in the capacity as "Debtors In Possession," have taken out two loans to stay financial afloat and defray bankruptcy costs: A $750,000 loan from Amegy Bank and a $500,000 loan from a conglomerate of lenders led by Amegy that was completed just this month.
One LMC estate tactic has been to pursue money from several restricted college endowments. But the Texas Attorney General's Office intervened in October in its capacity as protector of the public's interest in charity.
The AG in particular was investigating a missing $1.07 million missing from an endowment fund that was supposed to revert to Sam Houston State University the event the college shut down.
Additionally, the AG currently is suing LMC to make sure the estate does not sue former staff members against a "Directors and Officers" liability policy to generate revenue.
Other entities have sued the LMC bankruptcy estate to protect endowment money. The Texas Methodist Foundation, for instance, has filed a suit to prevent Ragan from liquidating five separate charitable endowments totaling $265,000.
In December, Ragan agreed to stop pursuing money from an endowment belonging to the United Methodist Higher Education Foundation in return for a $7,000 payout. As part of this settlement, $130,000 in back pay was agreed to be returned to the furloughed LMC employees. All of this money came from a $1 million UMHEF endowment fund.
Ragan tried to portray the employee backpay as a Christmas gift from the bankrupcy estate. But some employees, such as Michelle Zenor, a former associate professor of English at LMC, were less than impressed.
"I received approximately 10 percent of the money LMC owes me," Zenor said. "I would characterize the payment as very little and very late. I am also unhappy with the public relations spin that this is some sort of Christmas charity. It was not a benevolent gift--these were wages earned months ago."
Several Jacksonville residents continue to hold hope that a buyer will step in, make the right offer, and rescue the college from extinction.
But the clock continues to tick toward the Jan. 14 Lon Morris College bankruptcy estate auction.
A last minute reprieve is always possible, but it's more likely the campus will be sold in pieces. These purchases would be confirmed by the bankruptcy court Feb. 4.
Ragan, meanwhile, remains LMC's last remaining employee — while she awaits the $144,001 payment from LMC she has requested to receive two days after this auction.
- Ben Tinsley
Pot bust largest in county's