The deliberations of senior secured lender Amegy Bank dominated the Lon Morris College bankruptcy auction proceedings this week, and probably was responsible for the auction extending a second day into Tuesday, a Jacksonville official said.
Joe Angle, Jacksonville city attorney — who was there to watch over the interests of the city — witnessed the deliberation of Amegy Bank officials because he was housed in a conference room with them.
"Officials with Amegy, as the primary secured creditor, were analyzing bids on each of the many various pieces of property and deciding if they wanted to accept them," Angle said.
This week's proceedings strayed far from the format of a traditional "auction" image. Prospective bidders did not gather together in one audience to raise their hands and make bids. There was no gavel-banging master of ceremonies concluding each sale on the spot.
Instead, bankruptcy bidders were sent to conference rooms in the Dallas offices of McKool Smith PC — the law firm representing the estate — while secured and unsecured creditors were seated elsewhere, separately.
Instructions, bids and counter-bids were conveyed from room to room by employees of AmeriBid, the company hired to handle the auction, Angle said.
"It was nothing like the traditional idea of the auction," Angle said. "We never even saw the bidders. It went on for three hours. … The room we were in with Amegy was one big conference room."
Amegy has a vested interest in Lon Morris, starting with the $750,000 "debtor in possession" loan it provided the college in July in exchange for filing Chapter 11 instead of Chapter 7 bankruptcy, court documents show.
In December, Amegy then led a "a syndicate of lenders” that included Amegy Bank, N.A., Scurlock Foundation, Heartspring Methodist Foundation, and Martha Squibb to provide LMC with a second, $500,000 DIP loan.