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.
In the News
AG tries to block $500,000 loan to Lon Morris
- In the News
-
-
Burk to serve as next ACA school administrator
Athens Christian Academy (Kindergarten through 6th grade) is pleased to announce Dale Burk as the new administrator beginning July 2013.
-
SLIDESHOW: Jake's Skate Park in Malakoff celebrates 3rd anniversary
Jake's Skate Park in Malakoff celebrated its third anniversary Saturday. Hundreds of skaters, kids and volunteers — many from First Baptist Church of Malakoff — were on hand for the event. The park was constructed by Tom and Estella Lyon and named after their son, Jake, who died in 2003.
-
County unemployment rate sees dip in April
The Henderson County unemployment rate improved in April from the previous month, according to information released on Friday by the Texas Workforce Commission.
-
Justin Jones Eagle Scout Work Day at Kiwanis Park
Athens Life Scout Justin Jones spent Friday and Saturday repairing benches and performing other acts of community service at Kiwanis Park. He enlisted the help of a few fellow Scouts and friends in the project on Saturday. Jones is working on the requirements to earn the rank of Eagle Scout.
-
REGION II, 3A QUARTERFINALS: On the brink
The Athens Hornets find themselves in a 0-1 hole following Friday night's 10-0 loss to Pleasant Grove in the best-of-three regional quarterfinal opener at East Texas Baptist University.
-
REGION II-3A QUARTERFINAL: AHS-Pleasant Grove site changed
Athens head coach Dallas Robertson has informed the Athens Daily Review that due to unplayable field conditions at Northeast Texas Community College, Game 1 of the regional quarterfinals has been moved.
-
5/17 Athens Christian Academy holds fund-raising car wash
The sixth-grade Athens Christian Academy students of Angie Pagitt had a little fun in the sun while they got a little work done at the same time on Friday.
-
New Texas budget offer raises hopes of Friday deal
Following a week of seesaw talks and rising tensions between Republicans and Democrats over allegedly broken deals, Lt. Gov. David Dewhurst said he expects the House and Senate to finally agree Friday on a new state budget that would restore $4 billion of public school funding that was cut two years ago.
-
NJCAA WOMEN'S NATIONAL SOFTBALL TOURNAMENT: A crusher in Utah
The Trinity Valley Community College Lady Cardinals were eliminated from the NJCAA National Softball Tournament by regional rival Paris on Thursday evening.
-
Weather with a twist
Mother Nature delivered a powerful punch Wednesday evening through a complex of super cell storms that produced tornadoes, large hail and wreaked havoc across North Texas.
- More In the News Headlines
-
Raw: Rescue Workers Search Oklahoma School
Raw: Witness Describes Scene After Okla. Tornado
Raw: Aftermath of Massive Tornado in Oklahoma
Raw: House Burns After Massive Oklahoma Tornado
Raw: Tornado on the Ground in Oklahoma
Split-second Choice Ended With NY Student Dead
White House Backs 'Shield Law' for Media
Wave of Attacks Kills Scores in Iraq
Pug Life on Display at Wisconsin Festival
Company Promises to Make All Snail Mail Digital
Analyst: Tumblr Fills Void in Yahoo's Offerings
Commuters Face Delays After Conn. Train Accident
Raw: Swarm of Tornadoes Slams Plains
Raw: Fierce Bombing in Qusair, Syria
RAW: TV Staff Take Cover From Tornado
Raw: Accused US Spy Reportedly Leaves Russia
AP CEO: Records Seizure 'Unconstitutional'
Fatal Hot Air Balloon Accident in Turkey
Tornadoes, Storms Strike Midwest
'Babyland': Camp Lejeune's Toxic Legacy?
