Daily Progress, Jacksonville, TX

January 22, 2013

City of Jacksonville, others object to Lon Morris liquidation

Ben Tinsley
Jacksonville Daily Progress

TYLER — Jacksonville City Attorney Joe Angle has filed a formal objection to Lon Morris College's bankruptcy liquidation plan, contending that with the finalization of the proceedings in early February, there is concern the city's claim on land such the rodeo grounds and arena has not yet been formally recognized.

Jacksonville is one of several entities whose representatives have filed objections to protect their interests in the bankruptcy proceedings. The LMC estate conducted its auction last week and a federal judge is expected to confirm or deny the sale in court on Feb. 4.

Angle said Monday he filed the paperwork late last week to protect the rodeo grounds and arena; the RV parking/connections at 736 Woodlawn; the defense football field at 913 Peeples; the basketball court at 905 Peeples; the recreation center at 905 Peeples; and an animal pound at 739 Woodlawn.

"We have filed our objection mainly to keep this matter in front of the judge," Angle said. "Ours isn't a big hurdle as far as we are concerned."

The city's objections center on property that had been donated to LMC by a special warranty deed. The deed stipulates the property automatically returns to the city in the event the college failed to install $250,000 in improvements to the property.

Angle said he believes it is important to remind the judge that the city has rights to the property through this “reversionary” part of their deed.

Jacksonville City Manager Mo Raissi agreed.

"We want it back and hopefully all of this can be worked out as soon as possible," Raissi said.

The city's objections were filed late Friday, the same day Federal Bankruptcy Judge Bill Parker granted a payment of $144,001.12 to LMC Chief Restructuring Officer Dawn Ragan, a representative of the Bridgepoint Consulting, LLC, hired this summer to help LMC through its financial woes. The pay, which was granted expediently because there were no objections filed, is for work performed July 2 through Sept. 30.

Last week, Judge Parker awarded McKool Smith PC, the law firm representing LMC's bankruptcy estate, $85,529.90 for work performed for LMC between July 2 and Sept. 30. But he also docked them some $14,000 for over 30 man hours of alleged LMC over-billing.

The other entities that have also filed objections against finalization of liquidation include Texas National Bank in regard to property, mineral and royalty interests; the Cherokee County Appraisal District plus Grayson, Gregg, Smith, Marion and Upshur Counties in regard to liens and over $5,000 in 2012 taxes; and the Scurlock Foundation, which contends the plan discriminates against its property and claims.

Additionally, the Texas Workforce Commission has filed an objection to the finalization in an attempt on Thursday to recover $16,631.69 in employment taxes. The Methodist Children's Home of Waco, filed a similar motion on the grounds that property willed to LMC should revert to them now that the college has ceased to exist.

As far as the city is concerned, Angle he doesn't anticipate this action by the city will gum up the finalization of the bankruptcy liquidation.

"Right now, we don't know what is going to happen with the finalization of the auction," Angle said. "We're also adding belts and suspenders here to make sure the judge doesn't forget. It's just a waiting game right now."