TYLER – The Hon. Bill Parker of the U.S. Bankruptcy Court for the Eastern District of Texas has ruled in favor of the Lon Morris College bankruptcy estate by giving interim approval for a $500,000 debtor-in-possession loan to help complete the sale of the school's remaining assets.
The 158-year-old college, Texas' oldest junior college, filed for bankruptcy protection earlier this year. The bankruptcy estate is represented by attorney Hugh Ray III and other lawyers from the Texas offices of McKool Smith. In addition to approving the loan, the bankruptcy court also cleared the way for an asset auction at McKool Smith's offices in Dallas on Jan. 14, 2013, when the majority of the school's 112-acre campus will be sold.
"We are extremely pleased that the Court has approved this loan and cleared the way for what we believe will be a successful auction," says Dawn Ragan of Austin, Texas-based Bridgepoint Consulting, the chief restructuring officer for the school's bankruptcy estate. "The loan approved today will help maximize the value of the estate as we work toward satisfying the school's creditors, which include more than 100 former Lon Morris College employees who have not yet been paid for their work."
In his decision issued from the bench on Dec. 5, 2012, Judge Parker denied attempts by the Texas Attorney General's Office to prevent the bankruptcy estate from securing the debtor-in-possession loan, which will be used to cover insurance, utilities and similar expenses, in addition to paying the professionals who are working to increase the estate's value.
"Today's ruling means the bankruptcy court agrees with our position that this loan and the upcoming auction are the best options available to pay the college's creditors by maximizing the value of the estate's assets," says Mr. Ray, a longtime veteran of Texas bankruptcy courts. "Our goal is to make sure the creditors are paid what they're owed, and everyone involved is working hard to make that happen."
The auction will include approximately 50,000 square feet of academic lecture halls, dormitory buildings, a technology center, a gymnasium, and fields for football, baseball and other sports. A detailed auction listing is online at http://www.ameribid.com/upcoming-auctions/auction-detail/?id=192730. Tulsa, Okla.-based AmeriBid is coordinating the auction based on prior approval by the bankruptcy court.