Daily Progress, Jacksonville, TX


February 12, 2013

Federal judge confirms Lon Morris College's bankruptcy plan

LMC estate official Dawn Ragan said employees of the college will be paid what they are owed



Ragan, meanwhile, will remain with the estate for awhile. She has effectively nominated herself to become the "Plan Agent" who will oversee its further liquidation efforts following Parker's final order. She will make $300 an hour and no longer answer to the bankruptcy court, although she will report to a three member board comprised of LMC creditors.

In her new capacity as Plan Agent, Ragan will be allowed to sell all remaining collateral and assets of the LMC bankruptcy estate and make financial distributions. She also is charged with establishing a liquidation trust.

By virtue of the judge's order, Texas National Bank will retain its lien on LMC's Cooper House as well as retain certain mineral rights. Legal action filed against the estate by organizations such as the Texas Methodist Foundation and Heartspring Methodist Foundation will be allowed to go forward, as well. Additionally, the estate will pay $15,000 to Methodist Children's Home.

The bankruptcy proceedings were prompted in July after still-undisclosed financial problems forced employees of the longstanding college to miss three payrolls.

The rodeo grounds, meanwhile, were deeded to the college with specific considerations in April 2009. One requirement was that the college invest $250,000 in improvements to the grounds, including painting, roof patching, and regular maintenance.

As part of the arrangement, LMC was required to permit the arena's use by the rodeo association for the annual PRCA Tops in Texas Rodeo event.

A special warranty deed, signed by LMC and Jacksonville employees, stipulated that if the improvements were not made, the property would automatically revert back to the city.

Not immediately addressed in the paperwork is a delinquent $25,600 water bill LMC apparently still owes the city. Due to the finality of the judge's order, recovering it is unlikely.

At last glance, the LMC bankruptcy estate was still wrestling with the Texas Attorney General's office over who has the legal right to claim proceeds from the $3.5 million Directors & Officer's Liability Insurance policy.

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