A federal bankruptcy court judge on Friday approved an agreement allowing Texas National Bank officials to take possession of certain estate property and mineral rights the Lon Morris College bankruptcy estate used as collateral to secure a $2.8 million loan in February, The (Jacksonville, Texas) Daily Progress reported yesterday. Bankruptcy Judge Bill Parker's ruling was made as the clock continued to tick toward a Jan. 14 Lon Morris College bankruptcy estate auction and a Feb. 4 sale confirmation date. The LMC estate started its bankruptcy proceedings in July. As part of the Friday ruling, Judge Parker of the U.S. Bankruptcy Court for the Eastern District of Texas terminated an "automatic stay" that prevented Texas National Bank from moving forward in its LMC collection process. LMC bankruptcy officials secured the $2.8 million loan in February. As collateral, college bankruptcy officials used campus property as well as oil, gas mineral and royalty rights from college-owned property in DeSoto Parish, La.; Lafayette County, Ark.; Lea County, N.M.; and the Texas counties of Shelby, Panola, Marion, Freestone, Upshur, Harrison, Grayson and Titus. In the original petition filed before the judge in October, Texas National Bank officials argued that any stay against collecting what is owed should be terminated because Lon Morris has failed to properly maintain its collateralized property.
