Posted 12:55 am Wednesday, July 04, 2012
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Lon Morris: Bankruptcy A Step Forward
By KELLY GOOCH
Staff Writer
JACKSONVILLE — Officials at Lon Morris College said Monday’s bankruptcy filing will allow the institution to move forward with reorganization plans and continue its mission.
The financially strapped college filed a voluntary chapter 11 bankruptcy petition in a Tyler federal court — a day before a scheduled foreclosure proceeding on dormitories, according to a statement from the college.
“I think the main thing is there’s been negative cash flow for a good long period of time, and (the college is) just getting to the point that this bankruptcy is the best thing to do at this point,” Lon Morris spokesman David Hubbard said. “When Bridgepoint (Consulting) came in (to help with reorganization efforts), their goal was to determine what would be the best avenue to go, and finally after a month and a half or two months, their determination was for this — to file the chapter 11.”
Lon Morris is doing second summer semester online classes, and the goal is to have a modified fall academic schedule with online and core classes. A small group of 11 faculty members still remains on campus.
Staff Writer
JACKSONVILLE — Officials at Lon Morris College said Monday’s bankruptcy filing will allow the institution to move forward with reorganization plans and continue its mission.
The financially strapped college filed a voluntary chapter 11 bankruptcy petition in a Tyler federal court — a day before a scheduled foreclosure proceeding on dormitories, according to a statement from the college.
“I think the main thing is there’s been negative cash flow for a good long period of time, and (the college is) just getting to the point that this bankruptcy is the best thing to do at this point,” Lon Morris spokesman David Hubbard said. “When Bridgepoint (Consulting) came in (to help with reorganization efforts), their goal was to determine what would be the best avenue to go, and finally after a month and a half or two months, their determination was for this — to file the chapter 11.”
Lon Morris is doing second summer semester online classes, and the goal is to have a modified fall academic schedule with online and core classes. A small group of 11 faculty members still remains on campus.
“I think basically and foremost (the bankruptcy) allows the college at this point to get on with why we’re here and the mission statement and the whole purpose of the college,” Hubbard said. “It’s been here for 160 some odd years, and we received a lot of support from a lot of people. I’ve still got ‘thank you’ notes to write, and we keep getting new ones who want to help.”
For instance, a group is cleaning and painting residence halls in anticipation for the fall term.
“Loving Lon Morris,” a group of volunteers, also continues to give daily support, Hubbard said, and members of First United Methodist Church in Jacksonville were on campus with lawn mowers on Tuesday morning.
The main focus right now, though, is to stay in compliance with the Southern Association of Colleges and Schools, which accredits Lon Morris, Hubbard said.
Lon Morris also recently hired Capstone Partners to facilitate a transaction with another educational institution or strategic partner, which the school is trying to complete this summer, according to Monday’s statement from Dawn Ragan, the chief restructuring officer for Lon Morris.
For instance, a group is cleaning and painting residence halls in anticipation for the fall term.
“Loving Lon Morris,” a group of volunteers, also continues to give daily support, Hubbard said, and members of First United Methodist Church in Jacksonville were on campus with lawn mowers on Tuesday morning.
The main focus right now, though, is to stay in compliance with the Southern Association of Colleges and Schools, which accredits Lon Morris, Hubbard said.
Lon Morris also recently hired Capstone Partners to facilitate a transaction with another educational institution or strategic partner, which the school is trying to complete this summer, according to Monday’s statement from Dawn Ragan, the chief restructuring officer for Lon Morris.
According to the statement, filing the bankruptcy petition means the college may concentrate on finding a partner or consummating a transaction, which will allow it to continue its core mission of educating students, “as it will realize some relief from its creditors” and “stay legal or collection actions against the college.”
Tyler bankruptcy attorney Howard Tagg said generally speaking, creditors have a court deadline to present claims, which the bankruptcy court can accept or reject.
“Basically (bankruptcy) allows time and opportunity to reorganize,” he said. “It allows creditors to be placed in classifications of priorities.”
He said paying employees who are due money will be a high priority in bankruptcy, and bankruptcy gives Lon Morris the right to break employee contracts.
Hugh Ray III of McKool Smith, and Tim Webb of Webb & Associates are representing the college, and Judge William Parker of the U.S. Bankruptcy Court, Eastern District of Texas, has been assigned the case.
Tyler bankruptcy attorney Howard Tagg said generally speaking, creditors have a court deadline to present claims, which the bankruptcy court can accept or reject.
“Basically (bankruptcy) allows time and opportunity to reorganize,” he said. “It allows creditors to be placed in classifications of priorities.”
He said paying employees who are due money will be a high priority in bankruptcy, and bankruptcy gives Lon Morris the right to break employee contracts.
Hugh Ray III of McKool Smith, and Tim Webb of Webb & Associates are representing the college, and Judge William Parker of the U.S. Bankruptcy Court, Eastern District of Texas, has been assigned the case.
According to an affidavit filed in the Eastern District of Texas, on April 30, the college had about $35 million in assets, including $11 million in endowments and restricted funds, as well as $18 million in funded debt and $2 million in trade and other liabilities.
“Most of the endowments were either pledged as collateral against long-term debt or restricted for purposes that made the funds unavailable … for general operating needs,” the affidavit reads.
Lon Morris has bled millions since at least the 2007-08 school year.
The school’s financial problems led to delayed paychecks for employees and resulted in the furloughs of more than 100 employees and the resignation of President Dr. Miles McCall.
“Most of the endowments were either pledged as collateral against long-term debt or restricted for purposes that made the funds unavailable … for general operating needs,” the affidavit reads.
Lon Morris has bled millions since at least the 2007-08 school year.
The school’s financial problems led to delayed paychecks for employees and resulted in the furloughs of more than 100 employees and the resignation of President Dr. Miles McCall.
Lon Morris announced in June that it will seek an alliance with another educational institution and is expected to eliminate its athletic programs as part of its efforts to reorganize, remain viable and emerge from financial difficulties.
Jacksonville residents are weighing in on the college’s most recent step — filing bankruptcy.
Don Huffaker said he is disappointed with the news and believes sports got to be “too big too quick.”
However, being a school with a rich history that goes back to 1854, he said he hopes it survives.
Another resident, Lue Ann Williams, whose daughter attended Lon Morris, said she too was disappointed that the school got to the point of bankruptcy, but she believes in its importance.
“I believe that it needs to be kept open — whatever it takes to keep them standing,” she said. “Whatever it takes to keep these kids on a positive road, I’m all for it. We need both of these colleges (Lon Morris and Jacksonville College).”
Alan Jacobsen agreed, saying the college is also important economically.
“I hope it works out well for them,” he said. “It’s a business like any other business. It brings in folks and helps the economy. I wish them well.”
Jacksonville residents are weighing in on the college’s most recent step — filing bankruptcy.
Don Huffaker said he is disappointed with the news and believes sports got to be “too big too quick.”
However, being a school with a rich history that goes back to 1854, he said he hopes it survives.
Another resident, Lue Ann Williams, whose daughter attended Lon Morris, said she too was disappointed that the school got to the point of bankruptcy, but she believes in its importance.
“I believe that it needs to be kept open — whatever it takes to keep them standing,” she said. “Whatever it takes to keep these kids on a positive road, I’m all for it. We need both of these colleges (Lon Morris and Jacksonville College).”
Alan Jacobsen agreed, saying the college is also important economically.
“I hope it works out well for them,” he said. “It’s a business like any other business. It brings in folks and helps the economy. I wish them well.”
