Posted 12:17 am Tuesday, December 04, 2012
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Lon Morris facility auction may be delayed
An anticipated auction later this month for Lon Morris College facilities could be delayed.
At least that's what the Texas Attorney General's Office is seeking in an objection filed Thursday with the United States Bankruptcy Court Eastern District of Texas.
In the objection, attorneys oppose the auction taking place on its scheduled date of Dec. 13, writing that “rushing to conduct an auction …when approval of the sale would not occur until February … at the earliest … is not justified under these circumstances.”
“While (Lon Morris) has apparently already been marketing the property to certain known potential buyers, and (Lon Morris') auctioneer (AmeriBid) has sent out marketing brochures, the (Attorney General) contends that providing, at most, only six business days notice of the auction to the market in general is not reasonable given that any resulting sale would not close until after the confirmation hearing,
which is presently anticipated to take place in February,” attorneys write in the objection.
According to court documents, the Attorney General also is worried that there could be less auction participants if it takes place during the holidays, and that Lon Morris may inappropriately be trying to sell restricted assets in the auction.
Court documents state that the Attorney General identified four parcels it thinks are restricted and is working with Lon Morris attorneys to find out if they are part of the auction.
At least that's what the Texas Attorney General's Office is seeking in an objection filed Thursday with the United States Bankruptcy Court Eastern District of Texas.
In the objection, attorneys oppose the auction taking place on its scheduled date of Dec. 13, writing that “rushing to conduct an auction …when approval of the sale would not occur until February … at the earliest … is not justified under these circumstances.”
“While (Lon Morris) has apparently already been marketing the property to certain known potential buyers, and (Lon Morris') auctioneer (AmeriBid) has sent out marketing brochures, the (Attorney General) contends that providing, at most, only six business days notice of the auction to the market in general is not reasonable given that any resulting sale would not close until after the confirmation hearing,
which is presently anticipated to take place in February,” attorneys write in the objection.
According to court documents, the Attorney General also is worried that there could be less auction participants if it takes place during the holidays, and that Lon Morris may inappropriately be trying to sell restricted assets in the auction.
Court documents state that the Attorney General identified four parcels it thinks are restricted and is working with Lon Morris attorneys to find out if they are part of the auction.
“While (Lon Morris) maintains that none of the listed property is restricted, it is possible the (Attorney General) will come to a different conclusion, and the (Attorney General) contends that any dispute over the restricted nature of property should be adjudicated before the court authorizes its sale,” attorneys write.
According to court documents, the Attorney General planned to file a declaratory action against Lon Morris, “seeking a determination that certain alleged assets of (Lon Morris) are not property of the estate.”
When asked about the Attorney General's objection, Lon Morris Attorney Hugh Ray III told the Tyler Morning Telegraph via email that he could not comment Monday but would try to comment on the issue today.
Tom Kelley, spokesman with the Texas Attorney General's Office, said Monday morning that the office may file something else this week.
That is not the only objection recently filed by the Texas Attorney General's Office. Court documents show that the Attorney General is also objecting to Lon Morris' request to borrow $500,000 from lenders “to get through the auction and plan confirmation process.” In the college's request, attorneys say that the funds are needed to secure and market the college, and without them, Lon Morris' assets would not be protected, and its estate and creditors, along with the community, “would be substantially and irreparably harmed.”
The Texas Attorney General's Office claims in its objection that the proposed financing “almost entirely offsets any benefit the unsecured creditors would receive from the auction process” and that the auction is rather “for the true benefit of the secured creditors.”
It also claims in court documents that Lon Morris is not specific enough as far as how it will use loan proceeds.
The objections from the Attorney General came last week around the same time as AmeriBid, the company auctioning off Lon Morris' property, gave tours of the campus.
According to court documents, the Attorney General planned to file a declaratory action against Lon Morris, “seeking a determination that certain alleged assets of (Lon Morris) are not property of the estate.”
When asked about the Attorney General's objection, Lon Morris Attorney Hugh Ray III told the Tyler Morning Telegraph via email that he could not comment Monday but would try to comment on the issue today.
Tom Kelley, spokesman with the Texas Attorney General's Office, said Monday morning that the office may file something else this week.
That is not the only objection recently filed by the Texas Attorney General's Office. Court documents show that the Attorney General is also objecting to Lon Morris' request to borrow $500,000 from lenders “to get through the auction and plan confirmation process.” In the college's request, attorneys say that the funds are needed to secure and market the college, and without them, Lon Morris' assets would not be protected, and its estate and creditors, along with the community, “would be substantially and irreparably harmed.”
The Texas Attorney General's Office claims in its objection that the proposed financing “almost entirely offsets any benefit the unsecured creditors would receive from the auction process” and that the auction is rather “for the true benefit of the secured creditors.”
It also claims in court documents that Lon Morris is not specific enough as far as how it will use loan proceeds.
The objections from the Attorney General came last week around the same time as AmeriBid, the company auctioning off Lon Morris' property, gave tours of the campus.
The school, which filed bankruptcy in July, entails about 112 acres of academic halls, student housing and athletic facilities, according to an auction brochure. It has about 50,000 square feet of academic lecture halls, about 95,000 square feet in student dormitories, an athletic training complex, a gymnasium and multiple playing fields, the auction brochure states.
“There are so many things this group of buildings can be, just depending on what ultimate configuration it ends up,” AmeriBid spokesman Carl Carter said Friday.
In the end, though, Brent Wellings, regional director with AmeriBid, has said they want to put packages together that make sense for different buyers.
“We want to remain flexible through this process so we can listen to people like the Nolands,” who want to ensure that a memorial marker for Sammy Noland stays on campus, “and other potential buyers who have interest in specific parts of the campus so that we can structure a sale that is beneficial to everyone that wants to participate in the auction,” Wellings said Friday.
Lon Morris Chief Restructuring Officer Dawn Ragan has said some personal property will be auctioned with the buildings. Some items also may be purchased by other schools; some items the school is trying to return to donors and other items will be made available to the alumni and local community, she said. Theater items were recently given to Jacksonville High School and Jacksonville College.
The auction is one of the latest chapters in Lon Morris' financial struggles.
The financially-strapped institution filed a voluntary chapter 11 bankruptcy petition in July after bleeding millions of dollars since at least the 2007-08 school year, when college representatives said the school embarked on a costly plan to grow enrollment.
“There are so many things this group of buildings can be, just depending on what ultimate configuration it ends up,” AmeriBid spokesman Carl Carter said Friday.
In the end, though, Brent Wellings, regional director with AmeriBid, has said they want to put packages together that make sense for different buyers.
“We want to remain flexible through this process so we can listen to people like the Nolands,” who want to ensure that a memorial marker for Sammy Noland stays on campus, “and other potential buyers who have interest in specific parts of the campus so that we can structure a sale that is beneficial to everyone that wants to participate in the auction,” Wellings said Friday.
Lon Morris Chief Restructuring Officer Dawn Ragan has said some personal property will be auctioned with the buildings. Some items also may be purchased by other schools; some items the school is trying to return to donors and other items will be made available to the alumni and local community, she said. Theater items were recently given to Jacksonville High School and Jacksonville College.
The auction is one of the latest chapters in Lon Morris' financial struggles.
The financially-strapped institution filed a voluntary chapter 11 bankruptcy petition in July after bleeding millions of dollars since at least the 2007-08 school year, when college representatives said the school embarked on a costly plan to grow enrollment.
In August, the college learned it would lose federal student aid and subsequently decided to suspend the fall semester. Ray has said that changed the nature of the case, which went from selling an operating facility to instead auctioning its assets as real estate.
About 100 students were expected to attend Lon Morris this fall, and other East Texas community colleges have stepped in to help accommodate them.
Per its responsibility to protect charitable assets, the Texas Attorney General's Office also has been investigating how $1.3 million in a restricted gift was spent by Lon Morris, the agency confirmed.
The funds in question are from the Long Endowment, which specifies that if Lon Morris College closes, the main library at Sam Houston State University in Huntsville becomes the beneficiary.
Additionally, the Texas Methodist Foundation filed a lawsuit early last month, wanting affirmation that five charitable endowments the foundation administers are not viewed as property of Lon Morris' bankruptcy estate. According to the lawsuit, the endowments were created under wills or trust instruments before Lon Morris filed for bankruptcy. The lawsuit states that the bequests were made to the foundation, and the endowments were originally created to further “educational, charitable and religious endeavors of the Methodist Church and Methodism.” The endowment funds are about $265,000, according to the lawsuit.
Lon Morris' next hearing is scheduled for Wednesday morning.
About 100 students were expected to attend Lon Morris this fall, and other East Texas community colleges have stepped in to help accommodate them.
Per its responsibility to protect charitable assets, the Texas Attorney General's Office also has been investigating how $1.3 million in a restricted gift was spent by Lon Morris, the agency confirmed.
The funds in question are from the Long Endowment, which specifies that if Lon Morris College closes, the main library at Sam Houston State University in Huntsville becomes the beneficiary.
Additionally, the Texas Methodist Foundation filed a lawsuit early last month, wanting affirmation that five charitable endowments the foundation administers are not viewed as property of Lon Morris' bankruptcy estate. According to the lawsuit, the endowments were created under wills or trust instruments before Lon Morris filed for bankruptcy. The lawsuit states that the bequests were made to the foundation, and the endowments were originally created to further “educational, charitable and religious endeavors of the Methodist Church and Methodism.” The endowment funds are about $265,000, according to the lawsuit.
Lon Morris' next hearing is scheduled for Wednesday morning.
