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December 6, 2012

Lon Morris: $150,000 loan in, $144,001 paycheck out?

Dawn Ragan, chief financial officer for the Lon Morris bankruptcy estate, is making nearly $300 an hour, court records show

TYLER —

One day before a federal judge authorized a $150,000 debtor-in-possession loan so that the Lon Morris College bankruptcy estate can pay some of its bills, LMC's Chief Restructuring Officer Dawn Ragan filed paperwork requesting to be paid $144,001 for three month's work.

A hearing regarding the proposed payment is expected to be held at 9:30 a.m. Jan. 16 in U.S. Bankruptcy Court Eastern District of Texas — two days after an auction is conducted for the bankruptcy estate.

Ragan's paperwork was filed Tuesday in the court of U.S. Bankruptcy Judge Bill Parker, Eastern District, which also is where the debtor-in-possession loan was authorized by Parker on Wednesday.

The only currently-employed officer at the college, according to court records, Ragan was hired after being selected from a team of Bridgepoint Consulting LLC personnel. They had been working at LMC since May 14 as the college's financial advisors.

After College President Dr. Miles McCall resigned May 24, Ragan was formally hired as chief restructuring officer on July 2. She is asking to be paid for the time period between July 2 and Sept. 30 of this year.

Ragan's agreement with the college obligates LMC to defend her against any legal claims made during the course of her employment. It also restricts LMC from making any claims against her — unless they are claims of willful misconduct or fraud.

This written agreement can be terminated with two weeks written notice. Ragan is supposed to be compensated on a semi-monthly basis.

Her charge: Help the college bankruptcy estate handle the hundreds of potential creditors and over 200 unsecured creditors with known claims.

Ragan expanded on LMC history in court documents. She mentions the Lon Morris bankruptcy estate has sought to recoup costs by using the proceeds of certain endowment funds — "unrestricted funds" — being maintained by various foundations associated with the college.

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