Daily Progress, Jacksonville, TX

January 23, 2013

Auction ‘mistake’ will have to go before judge for decision

Ben Tinsley
Jacksonville Daily Progress

JACKSONVILLE — Despite being warned early and often that city-owned property can't be sold without the legal permission of Jacksonville officials — and going so far as to deny any responsibility when they did it anyway — the parties involved with the Lon Morris College bankruptcy estate auction have basically told city officials that they are passing this legal headache on to Federal Bankruptcy Judge Bill Parker to resolve.

At least two city properties were sold to 11x17 without the city’s permission.

The rationale behind this decision is auction sales aren't final until Parker formally approves them in court on Feb. 4 anyway.

"The thing about a bid is everything has to be approved by the judge," said Jacksonville City Attorney Joe Angle. "When he asks if we wanted the land to be sold we are not just going to tell him 'no,' we are going to tell him 'HECK no!"

City Manager Mo Raissi said he was told pretty much the same thing.

"They're saying 'This is just a bid and it has to go through the court and the judge will look at the decision so this doesn't mean anything,'" Raissi said Wednesday afternoon. "Nothing is final until the judge rules."

The mistake was apparently made by Oklahoma-based AmeriBid, the auction company retained to market the properties and conduct the auction.

Neither Chief Restructuring Officer Dawn Ragan of Bridgepoint Consulting nor Houston attorney Hugh Ray III from the Texas offices of McKool Smith have responded to requests for comment submitted on both Tuesday and Wednesday. Likewise, Stephen Karbelk of Oklahoma-based AmeriBid, the auction company retained to market the properties and conduct the auction, did not respond to two rounds of emails.

However, C. Brent Wellings, a regional director and auctioneer for AmeriBid, on Tuesday vehemently denied any mistake had taken place and went as far as to allege Jacksonville city officials were fully knowledgeable of the transaction, which Raissi said they most certainly were not.  He did not respond to followup emails and multiple calls for additional comment on both Tuesday and Wednesday.

"There is no 'mistake' on the part of AmeriBid or any other party that worked to complete the recent auction, which included representatives from the City of Jacksonville," Wellings said in his Tuesday email. Another AmeriBid official offered similar denials to a local TV news outlet.

News of this mistaken sale came the same day LMC announced the conclusion of its bankruptcy auction, which began Jan. 14 and took in nearly $2.2 million. The high bidders were Jacksonville-based office supplier 11 x 17, which accumulated most of the property, the Jacksonville ISD, and William Adcock Jr. LMC, Texas’ oldest junior college, filed for bankruptcy protection in July.

In a press release issued to all media, Ragan said proceeds from the sale will be used to pay creditors and the school's former employees.

News that AmeriBid is alleging the city knew of the sale angered officials — especially since formal paperwork in the form of an objection to LMC's liquidation plan was already filed in federal court to prevent this exact thing from happening.

But ultimately it all came back to: Tell it to the judge.

"Joe (Angle) has talked this out with attorney and was assured this is just a bid," Raissi said. "We have told them 'No, we don't want anything to do with a sale' again and again. We want to keep the property. But it looks like it will be the judge's decision."