Daily Progress, Jacksonville, TX


February 1, 2013

SHOWDOWN: Lon Morris College bankruptcy hearings seemingly devolve into series of disputes; Texas AG asks for answers

Confirmation hearing on LMC liquidation plan takes place in Tyler's federal bankruptcy court Monday and Tuesday



Ragan has removed "decision to file bankruptcy" from the list of items exempted from legal liability. She has also removed certain members of the LMC bored of trustees from the list of shielded officials.

But for every change that was made by LMC, Abbott and his staff have had lingering concerns and objections — such as Ragan's suggested placement of all jurisdictions involved in the entire bankruptcy umbrella under one jurisdictional umbrella.

"The Attorney General continues to object to the retention of jurisdiction provisions of the Plan to the extent they impermissibly seek to vest this honorable court with exclusive jurisdiction to hear certain matters to which state courts have concurrent jurisdiction," the AG wrote.

Incidentally, LMC"s revised plan contends the concerns Texas Methodist Foundation and Heartspring Methodist Foundation have about the confirmation hearing can be resolved during respective adversary hearings rather than the final liquidation judgment.

In her paperwork, Ragan strongly asserts formal approval of the results of the recent auction sale is in the best interest of all creditors.

"There is no better option," she wrote. "The plan proposed a minimum guaranteed payment to former employees and secured creditors.'

Ragan said the revised plan addresses the concerns by the Texas Workforce Commission the US Trustee and the Texas Bank.

It does not, however, do so for the Scurlock Foundation, which contends the plan discriminates against its property and claims.

Representatives of the Amegy National Bank Association, "object to the sale and thus confirmation of the plan in its current form” because they believe conclusion of a Chapter 11 confirmation would absolve LMC of all financial obligations – including the collateral Amegy needs to get the loans paid.

The newest liquidation plan points out that discussions with Amegy have started and are expected to continue.

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