Daily Progress, Jacksonville, TX


March 28, 2013

Former LMC employees say they are still waiting for back wages

TYLER — Lots of money seems to be changing hands in the final days of the Lon Morris College bankruptcy estate — but none of it seems to be going toward paying the back wages of former LMC employees.

A federal judge approved the formal liquidation plan for the Lon Morris College estate in mid-February. But there was nothing in its language that addressed payment for these workers — who have yet to be reimbursed for their final weeks at the institution — in either the plan itself or federal bankruptcy Judge Bill Parker's ultimate order.

But then-LMC Chief Restructuring Officer Dawn Ragan and Houston attorney Hugh Ray III dispatched press releases to reporters, assuring them that agreements had been reached with several Methodist foundations and were expected to result in former employees receiving all owed money.

Fast forward to Thursday — more than a month later — and more than a million dollars has been expended in last-minute negotiations and deals between the LMC estate and debtors. But apparently, not a cent of that gone toward employees.

“No word. No money,” said Michelle Zenor, a former associate professor of English at LMC.

When asked about the status of the payments, Thomas Kelley, spokesman for Texas Attorney General Greg Abbott, said responsibility for it lays squarely on the shoulders Dawn Ragan, “"whose new position as liquidating trustee was created under the Plan of Liquidation.”

“The timing of 'if' or 'when' she will pay employees their back wages is totally up to her,” Kelley said.

Neither Ragan nor Hugh Ray, an attorney working with the LMC estate have responded in months to the Jacksonville Daily Progress' requests for comment.

In one release, Ragan recalled that the Texas Annual Conference of the United Methodist Church organized an earlier humanitarian appeal that generated enough funds to cover one missed payroll for the school’s former employees. But the agency closed early Thursday and a representative could not be reached to comment about any possible payment status.

The lack of address that the issue has received is becoming more and more glaring, employees say, Even former LMC president Dr. Miles McCall — who many see as the chief architect of the Lon Morris bankruptcy misery —  just negotiated a $10,000 settlement from LMC.

Dr. McCall has been accused of illegally liquidating an endowment fund earmarked for Sam Houston State University. He is being sued by both the Texas Attorney General's Office and by SHSU officials — under the guidance of the AG's office.

McCall, for unspecified reasons, came forward after the liquidation plan had been approved with a $155,000 claim for back wages and an alleged loan he made to LMC. But he agreed to accept $10,000 and relinquish the remainder and formally recognizing it as a “charitable contribution” to the LMC estate, according to paperwork filed in bankruptcy court by Ragan in her new capacity as LMC's Plan Agent.

Other LMC-related money moving agreements this week included Judge Parker approving the estate's proposed sale of over $1 million in mineral rights to a group of purchasers — proceeds that will immediately be used to pay back LMC's debt to Texas National Bank.

“After payment of $1,050,000 to the Bank and escrow of $25,000 as required by the compromise between the Agent and the Bank, the transfer of each of the Mineral Rights to the Purchaser will be as of the closing date a legal, valid, and effective transfer of such assets,” Parker wrote.

As authorized by the judge, Ragan is now free to sell the mineral rights to the party the judge designated as the “winning bidder,” LM Royalty Partners or an affiliate. Alternatively, the judge specified as the “backup bidder” an unnamed general partnership or its affiliate.

Parker contends the sale documents executed by the purchaser and the agent constitute the highest and best offer for the mineral rights, and will provide a greater recovery for the Debtor’s estate than would be provided by any other available alternative.

But many LMC employees such as Zenor, who have patiently waited for the money owed them during the bankruptcy proceedings, are still waiting for their turn. And they are starting to wonder when their wages will be forthcoming from Ragan.

In a previous interview, Zenor observed that the demise of LMC is tragic.

“The most valuable assets held by Lon Morris College were the commitment of the faculty, the dedication of the staff, and the promise of the students,” Zenor said. “Those intangibles were priceless — not for sale.  That is why the results of the auction are not surprising though the demise of the school is a shame.”


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