JACKSONVILLE (TYLER MORNING TELEGRAPH) - Lon Morris College mineral interests originally
believed to be worth $300,000 were sold for more than $1.3 million
Thursday in what one attorney deemed "a surprising and good turn of
events."
Potential purchasers spent the afternoon in negotiations
and bids went up in increments. At one point, amounts such as $1.175
million and $1.275 million were on the table.
In the end,
mineral interests were sold to a group of East Texas oil men for $1.375
million, Attorney Hugh Ray III, who represents Lon Morris, said.
Ray
said the sale will close on Wednesday next week or before, and if that
purchaser doesn't close, then another bidder will pay $1.3 million.
If the $1.375 million sale goes through, the college will walk away
with $300,000, and lender Texas National Bank, which is waiving $2.8
million in claims, will receive barely more than $1 million, he said.
"The
bottom line is the college has something in the form of mineral
interests in several states, and it never realized the full potential of
those mineral interests when it was there operating," Ray said. "Now
that we're here, we've dug up and found fields of diamonds under the
corpses."
He added, "We have found mineral interests all over the
place, and we were able to turn that into money when we thought there
was nothing left for the creditors."
Selling mineral interests is one of the latest endeavors by Lon Morris since filing bankruptcy.
Lon
Morris, the state's oldest junior college, 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.
The
bankruptcy estate worked with the company AmeriBid on January's
auction, which resulted in purchases by Jacksonville ISD, according to a
news release.
The district announced earlier this year that
trustees approved the $1.53 million purchase of the gymnasium,
administration building and more than 50 acres of land. That includes 10
acres around the gymnasium as well as about 40 acres in the area of the
baseball and softball fields.
Jacksonville ISD was a high bidder
in the auction as was local office supply company 11 x 17 Inc., which
bid on most of the school's academic buildings, the chapel and
dormitories, according to a news release.
Jack Webb, with 11 x
17, said last month via email that the company would like to sell the
campus to an established college to use as an extension.
In the
meantime, Lon Morris is still dealing with several matters, Ray said,
such as potential lawsuits against the former school president and
former school auditor.
Former president Dr. Miles McCall is
already facing various accusations from the Texas Attorney General Greg
Abbott. Lauren Bean, deputy communications director with the Texas
Attorney General's Office, said via email that McCall has until March 26
to file a response to the state's lawsuit against him "for gross
mismanagement of the college."
When reached by phone last month, McCall repeatedly said he "can't make any comments" in regard to the legal matters.
Additionally, Ray said the Cooper House, a former duplex-style residential housing unit, has yet to be sold.
Dawn
Ragan, plan agent for Lon Morris, has said settlement discussions with
the Attorney General also are still ongoing in regard to a $3.5 million
Lon Morris directors and officers liability policy between charities and
creditors.
Ray has said the Attorney General's Office and the
debtor are both seeking the money, and only the debtor's money would go
to creditors.
