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Lon Morris College Employees to Receive Back Pay Under Final Bankruptcy Plan

A Judge in Tyler has confirmed a final bankruptcy plan submitted on behalf of Lon Morris College and their attorneys.

The order approved by Judge Bill Parker of the U.S. Bankruptcy Court for the Eastern District of Texas in Tyler will allow payments to creditors and former employees of Lon Morris College to be paid in full.

The 158-year-old Methodist College, Texas’ oldest junior college, filed for bankruptcy protection last summer amidst a severe liquidity crisis that saw school employees miss three payroll periods and an interruption of the school’s utilities services.

Attorney Hugh Ray III of McKool Smith and Dawn Ragan of Bridgepoint Consulting have guided the school through the bankruptcy process.

“This is an important step in satisfying Lon Morris College’s debts and ensuring former employees are paid for their work in furtherance of the school’s mission,” says Mr. Ray. “Much credit goes to Dawn Ragan for her work with creditors and foundations to get this plan confirmed, and to Judge Parker for his patience and direction during this process.”

The bankruptcy plan was confirmed following a February 4 hearing where Judge Parker praised the work of Mr. Ray and Ms. Ragan, saying he recognized and appreciated the many hurdles that were overcome in order to reach the plan approval stage.

“We always believed that a workable plan could be achieved based on the shared goals of all parties involved,” says Ms. Ragan, who served as the school’s chief restructuring officer. “We could not have accomplished what we did without the support of many people, including the few remaining employees who are continuing the school’s charitable mission.”

Previously, Mr. Ray and Ms. Ragan negotiated a significant interim payment for former Lon Morris College employees who had not been paid for their final weeks of work. At last week’s hearing, the college announced agreements with several Methodist foundations that are expected to result in former employees receiving all the back wages they are owed, pending approval by the foundation boards and their regulatory agencies. The Texas Annual Conference of the United Methodist Church organized an earlier humanitarian appeal that generated enough funds to cover one missed payroll for the school’s former employees.

Oklahoma-based AmeriBid worked with Mr. Ray and Ms. Ragan to complete a recent auction of the college’s 112-acre campus in Jacksonville. Purchases by the Jacksonville Independent School District include land intended as the site for a new elementary school that will generate jobs and spur additional commerce in the Jacksonville area.

Under the approved plan, the school’s unsecured creditors, other than those owed wages, will receive financial recoveries over time as the school’s representatives continue to liquidate claims, sell assets and collect on insurance policies, all of which are expected to produce several million dollars.

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