Daily Progress, Jacksonville, TX

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November 30, 2012

BREAKING: Texas Attorney General seeks to halt Lon Morris Dec. 13 auction

The AG contends the Lon Morris bankruptcy estate is trying to sell properties it does not legally own

JACKSONVILLE —

On Thursday and Friday, representatives of Ameribid LLC gave tours of the empty Lon Morris campus to prospective buyers in anticipation of an anticipated Dec. 13 Dallas bankruptcy auction.

But in a Tyler bankruptcy courtroom, the Texas Attorney General's Office took strong measures to make sure the auction was — at the very least — delayed until after the New Year.

The AG is actively investigating whether the Lon Morris bankruptcy estate is trying to auction off restricted property it does not legally own. The office expects to file a declaratory judgment preventing that property from being sold.

The AG, protector of the public interest in charity, asserts the auction should not be held while it is still conducting an active investigation.

"In light of the fact that any sale would not close until February at the latest, the OAG asserts there is no good justification for conducting the auction on an expedited basis in the middle of the holiday season," reads the objection filed Thursday in United States Bankruptcy Court, eastern district of Texas Tyler division.

As part of the investigation, the AG has already located four parcels believed to be restricted properties that cannot legally be auctioned away, according to the documents provided to the newspaper by Tom Kelley, Texas Attorney General's Office spokesman.

AG officials are attempting to find the source of title to the college's unencumbered assets, according to the paperwork.

"The OAG contends that any dispute over the restricted nature of property should be adjudicated before the court authorizes its sale," according to the docents.

Additionally the AG objects to certain auction procedures as they are not in the best interests of unsecured creditors or the public interest in charity. Subsequently, the AG makes the following requests of the court in the objection:

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