A federal bankruptcy judge on Wednesday formally approved the dwindling Lon Morris College bankruptcy 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.
In paperwork filed Wednesday afternoon, Federal bankruptcy Judge Bill Parker effectively approved the sale and released LMC Plan Agent Dawn Ragan and Texas National Bank from further liability to one another.
“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.
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.
“The court is of the opinion that, in light of the agreements and modifications recited into the record at the hearing, and the withdrawal of all objections to the Motion based upon such stated agreements and modifications, approval of the Motion is in the best interest of the liquidating Debtor and its estate,” the judge wrote.
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.
This is one of the few remaining issues before Parker after the bulk of the LMC bankruptcy proceedings were finalized in early February and Dawn Ragan transitioned titles from Chief Restructuring Officer to the Plan Agent.
It's been known since before the bankruptcy was finalized that that this mineral rights issue would have to be resolved. In early February, Parker formally approved Texas National Bank officials taking possession certain estate property and mineral rights the Lon Morris College bankruptcy estate used as collateral to secure a $2.8 million loan.
At that time, Texas National Bank was given permission to foreclose on the college's athletic building property. But bank officials have since discovered more ownership confusion: One third of the property underneath the building was not under lien by the bank, court records show.
This agreement is designed to eliminate ownership confusion once and for all.
A more comprehensive account of this decision and its implications will be available in Friday's edition of the Jacksonville Daily Progress.