Lon Morris College bankruptcy estate officials tentatively agreed Wednesday to relax their grip on a $1 million endowment fund owned by United Methodist Higher Education Foundation in exchange for a $137,000 payment from UMHEF.
U.S. Bankruptcy Judge Bill Parker has to approve this proposed arrangement, reached Wednesday afternoon. But if he does, an estimated $7,000 of the money will go to the LMC bankruptcy estate and $130,000 of it will be distributed to former LMC employees on Christmas day.
The Christmas day disbursement was an agreement condition of UMHEF's.
LMC Bankruptcy Estate Attorney Hugh Ray filed paperwork Wednesday requesting the matter be decided Parker's Tyler courtroom at 9:30 a.m. December 20.
The UMHEF is a non-profit Christian foundation based in Nashville, Tenn. with a $1 million Lon Morris College Scholarship endowment that LMC officials contend consists of unrestricted funds that should be used to pay bankruptcy costs.
"The history of the UMHEF funds is clouded by a lack of written documentation by both the debtor and UMHEF," LMC bankruptcy officials wrote Wednesday.
This is the latest development in several endowment issues clouding LMC's bankruptcy process. The Texas Attorney General's Office is investigating a missing $1.3 million from an endowment that should have reverted to Sam Houston State University after LMC declared bankruptcy.
Additionally, the Texas Methodist Foundation has filed a lawsuit seeking to protect several endowments, asserting they were created with the intention of furthering educational, charitable and religious endeavors of the Methodist church and "Methodism" and were not intended to be used as financial fodder for liquidation costs.
The paperwork indicates LMC expects both the Texas Attorney General and the Tennessee Attorney General to oppose this arrangement, although it does not specify why.