Athens Review, Athens, Texas

In the News

December 4, 2012

AG tries to block $500,000 loan to Lon Morris

JACKSONVILLE — Texas Attorney General Greg Abbott is intervening in the bankruptcy proceedings of Lon Morris College to protect charitable endowments and ensure a level playing field for unsecured creditors trying to recover their money, court documents show.

Abbott's latest foray: Attempting to block a $500,000 loan that the LMC bankruptcy estate is seeking, allegedly to pay staff and maintain the college through the conclusion of an upcoming auction and sale

But there's no guarantee the auction will take place on Dec. 13.

Late last week,  AG representatives filed paperwork attempting to stall the upcoming Dec. 13 auction at least until after the New Year.

At roughly the same time Texas Attorney General officials were maintaining their strong presence in Tyler federal bankruptcy court last week, representatives of auction company Ameribid LLC  were calling area reporters en masse, offering tours of the now-vacant Lon Morris College campus, chatting up the auction and making no mention of any possible postponement.

As to his office's opposition to LMC's requested loan, Abbott contends if the college bankruptcy estate is allowed to borrow money without incoming revenue – basically, with no way to pay it back – it would amount to a de facto sale, which would be to the detriment of LMC's unsecured creditors. A $500,000 loan would provide problems for the unsecured creditors because it could eat into the $585,000 the bankruptcy estate has set for them in its plan, the petition states.

"The OAG contends that that proposed auction is actually being conducted for the true benefit of the secured creditors," reads the petition filed last week in Tyler.

One AG criticism of the loan request is that "there is no specificity for what cost and expense the loan proceeds will be used."

Ultimately, the loan illustrates vast disparities in the way the auction itself will benefit the college's secured and unsecured creditors, according to the paperwork, which was provided to the Daily Progress by Tom Kelley, Texas AG spokesman.

The AG contends college maintenance expenses should be limited to minimal staff, and security and maintenance personnel. 

Additionally, instead of taking a loan, LMC and secured creditors would be best served if the secured creditors themselves paid for the expenses the loan is being sought to cover, the AG said.

"Given that the debtor no longer conducts any business and is not generating any revenue, the proposed transaction essentially provides for the debtor to 'sell' its unencumbered property to the DIP lenders in order to fund administrative expenses for the true benefit of the case professionals," the petition reads. "… The debtor should not have to incur additional financing to the detriment of unsecured creditors."

 As part of their opposition to a Dec. 13 auction, the AG is currently investigating whether the Lon Morris bankruptcy estate is trying to auction off restricted property it does not legally own and expects to file a declaratory judgment preventing that from happening.

The auction should not be held since their active investigation is still being conducted, the AG asserts. As part of this investigation, the AG has already located four parcels believed to be restricted properties that cannot legally be auctioned away, reports show.

Yet another aspect of the AG investigation is a missing $1.3 million from an endowment that should have reverted to Sam Houston State University after LMC declared bankruptcy.

Finally, in a separate but related legal matter, the Texas Methodist Foundation has filed its own lawsuit against LMC and the AG's office last month to prevent the college's chief restructuring officer, Dawn Ragan, from liquidating five separate charitable endowments totaling $265,000 to pay Chapter 11 bankruptcy costs.

1
Text Only
In the News
  • How states fared on unemployment benefit claims

    Applications for U.S. unemployment benefits increased slightly last week to a seasonally adjusted 304,000.

    April 17, 2014

  • bomb1 VIDEO: A year after marathon bombing, Boston remains strong

    The City of Boston came together Tuesday to honor those who were injured and lost their lives at the Boston Marathon on the one-year anniversary of the bombing. While the day was sure to be emotional, those affected by last year's race are showing they won't let the tragedy keep them down.

    April 15, 2014 1 Photo

  • Conjoined boys separated at chest to exit hospital

    The conditions of conjoined twins separated last summer have steadily improved, and officials say they'll be released this week from a Dallas hospital.

    April 14, 2014

  • Police: Utah mom admitted to killing her 6 babies

     Authorities say a Utah woman accused of killing six babies that she gave birth to over 10 years told investigators that she either strangled or suffocated the children and then put them inside boxes in her garage.

    April 14, 2014

  • Texas grand jury to be seated in Perry ethics case

     A Texas judge is expected to seat a grand jury in an investigation into whether Republican Gov. Rick Perry abused his power by vetoing funding for public corruption prosecutors.

    April 14, 2014

  • VIDEO: CBS taps Colbert as Letterman’s Late Show successor

    Bloomberg’s Jon Erlichman reports that CBS has announced Stephen Colbert as its choice to replace the retiring David Letterman as host of “The Late Show” on Bloomberg Television’s “Lunch Money.”

     

    April 11, 2014

  • mfp file Hoffner Big win for college coach wrongly accused of child porn

    The ex-coach of Minnesota State University-Mankato - cleared on child porn charges - gets his old job back or could take the difference in pay should he decide to stay in a new position in North Dakota, an arbitrator has ruled. Todd Hoffner was accused when a technician found videos of his young children on his school-issued cellphone. Officials in Mankato fired him even though a judge had thrown out the charges.

    April 11, 2014 1 Photo

  • Mabank’s Cassiddy Petty takes first, second in Dairy Cattle

    Not many agriculture students travel to a county’s stockshow, and wins every place in their particular category.
    But, that’s what happened Wednesday night at the Henderson County Livestock Show with Cassiddy Petty, a senior at Mabank High School, and a member of the Chandler 4-H.

    April 10, 2014

  • Screen Shot 2014-04-10 at 10.25.07 AM.png VIDEO: Cement truck crashes into minivan

    A professor at Texas A&M University was fortunate to escape serious injury recently when a cement truck ran a red light at a College Station intersection and crashed head-on into his minivan. A dash camera that Dr. Guan Zhu had installed about a year ago captured the entire incident.

    April 10, 2014 1 Photo

  • BREAKING NEWS...Authorities investigate East Texas fatal shooting

     An East Texas shooting has left one person dead.

    April 10, 2014

Biz Marquee
AP Video
Captain of Sunken SKorean Ferry Arrested Raw: Fire Destroys 3 N.J. Beachfront Homes Raw: Pope Presides Over Good Friday Mass Raw: Space X Launches to Space Station Superheroes Descend on Capitol Mall Man Charged in Kansas City Highway Shootings Obama Awards Navy Football Trophy Anti-semitic Leaflets Posted in Eastern Ukraine Raw: Magnitude-7.2 Earthquake Shakes Mexico City Ceremony at MIT Remembers One of Boston's Finest Raw: Students Hurt in Colo. School Bus Crash Raw: Church Tries for Record With Chalk Jesus Raw: Faithful Celebrate Good Friday Worldwide Deadly Avalanche Sweeps Slopes of Mount Everest Police Arrest Suspect in Highway Shootings Drought Concerns May Hurt Lake Tourism Vermont Goat Meat Gives Refugees Taste of Home Calif. Investigators Re-construct Fatal Bus Cras Mayor Rob Ford Launches Re-election Campaign Appellate Court Hears Okla. Gay Marriage Case