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Former Lon Morris employees to receive unpaid wages thanks to charitable donations

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POSTED: Tuesday, August 27, 2013 - 7:20am

UPDATED: Tuesday, August 27, 2013 - 10:46am

A few years ago, employees of Lon Morris College in Jacksonville began to see delays in their paychecks.

After months of questions and confusion about the future of the school, most of the employees were notified of their ultimate termination by email in May of 2012.

Lon Morris finally filed for bankruptcy later that summer.

There were many remaining questions as to the future of the campus, and in February of 2013, the majority of the school's property was sold to Jacskonville ISD in auction for $1,530,000.

Now, several months later, the group managing the bankruptcy case for Lon Morris tells KETK that the terminated employees are finally going to be receiving their back-pay.

Here is a news release from that group, Bridgepoint Consulting:

This week former employees of Lon Morris College will receive payments generally equivalent to their prior unpaid wages as the result of charitable distributions being made by Heartspring Methodist Foundation and Texas Methodist Foundation, totaling $500,000.

The 158-year-old Methodist college, Texas' oldest junior college, filed for bankruptcy protection last summer amidst a liquidity crisis so severe the employees had missed 3 payrolls. The employees continued to work without pay so that students could complete their spring semester, in furtherance of the school's mission.

The assets of the school were sold as part of the bankruptcy plan, confirmed by Judge Bill Parker of the U.S. Bankruptcy Court for the Eastern District of Texas in February. Unfortunately sale proceeds were insufficient to satisfy the school's secured lenders, leaving the employees with no likelihood of receiving payment from the bankruptcy estate anytime in the near term. The school's financial crisis and inability to pay faculty and staff for so long created a significant hardship for many employees.

Lon Morris had investments and endowed funds at multiple foundations, and was in litigation and settlement discussions with certain of the foundations in an effort to access those funds. In compromise of those disputes, the foundations and the Chief Restructuring Officer, Dawn Ragan of Bridgepoint Consulting, agreed to the charitable distributions from the foundations to the employees.

Prior distributions were also made during the bankruptcy case. The Texas Annual Conference of the United Methodist Church organized a humanitarian appeal that generated enough funds to cover one of the missed payrolls. A Tennessee foundation also made a distribution towards the unpaid wages during the prior Christmas season. This final distribution from the two foundations was delayed due to matters pending with the office of the Texas Attorney General.

Ms. Ragan said "I am delighted we were finally able to make this happen. Heartspring and Texas Methodist worked diligently with us to get to this point. These charitable distributions are meant to recognize and repay these employees for the contributions they made to facilitate students completing their education and the Methodist mission. We could not have accomplished this without the support of many people working together."

Lon Morris will continue to liquidate claims, sell assets and collect on insurance policies that should produce several million dollars to make payments to other unsecured creditors over time.

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