By Maria Saporta
The proposed $20 million deal by FD LLC to save Morris Brown College, buy some of its property and settle its debt has run into several obstacles, but attorneys for the college Thursday morning asked for more time to resurrect the deal.
U.S. Bankruptcy Judge Barbara Ellis-Monro agreed to give the Morris Brown group two extra weeks to put together an alternative proposal. The Morris Brown group legally has the exclusive rights to put together a deal on the property through Aug. 26.
“Some of the terms from the buyer that we thought had been (settled) were unable to go forward with the bondholder side of the transaction,” said Anne Aaronson, an attorney with Philadelphia-based Dilworth Paxson, which is representing Morris Brown. “We tried to resurrect the deal. Ultimately that end of the deal fell through. Four days ago we received a letter from FD that they were willing to go forward on the debtor side.”
After the hearing, Aaronson said that FD LLC was not related to Family Dollar stores. She said FD was a developer that has done all kinds of projects, from residential to retail, and some of those projects have included Family Dollar stores.
The entities that hold the interests on an estimated $30 million of Morris Brown debt would rather not wait for another Morris Brown proposal, whether it be from FD or another party.
Instead they are interested in putting together alternative proposals to the one that has been offered by the representatives of Morris Brown College.
During Thursday morning’s hearing, Penn Nicholson, who is of counsel with the Bryan Cave law firm and is representing some of the bondholders, described FD LLC as a “straw buyer” and said the company could not provide any confidence that the deal was solid.
“The debtors are slipping further behind,” Nicholson told the judge. “Time is of the essence.”
Nicholson went on to explain that the Morris Brown property could be a critical part of the decision of whether the Atlanta Falcons decide to put the stadium on the site south of the Georgia Dome next to two MARTA stations or on the north site, which is a half-mile away at the corner of Northside Drive and Ivan Allen Jr. Boulevard.
In order for the stadium to built on the south site, the project would need to acquire the land where Friendship Baptist Church is currently located — at Martin Luther King Jr. Dive and Northside Drive. Friendship has expressed interest in moving to a parcel on the Morris Brown land — the Middleton Twin Towers dormitory site.
If Friendship is not able to secure the Morris Brown land, Nicholson said that it’s “likely the Falcons would move north,” which he described as “a hit for everyone.”
Nicholson asked the court to not give Morris Brown’s representatives another extension so that other solutions could move forward. “Exclusivity going forward could damage the stadium (deal),” Nicholson said.
The Atlanta Falcons have publicly stated that the south site is not feasible because they have not been able to acquire the properties needed for the stadium development. The deadline for that acquisition was set for Aug. 1. Now they have turned their attention to the north site, but there is still a possibility the south site is an option if a deal could be made to buy the land.
Although the judge told the Morris Brown attorneys that they would have two weeks to submit another financing plan, she seemed to want to keep them on a short leash.
“I think the debtor and interested parties are entitled to an two extra weeks,” the judge said, adding that two weeks was a short order to provide an amended proposal. At that time or shortly thereafter, she could decide whether it would be appropriate to “end exclusivity without prejudice.”
Meanwhile, the future of Morris Brown continues to be up in the air. The historically black college, which lost its accreditation several years ago, has less than 40 students today. Aaronson said that the AME Methodist Church has agreed to provide a $7.5 million line of credit to the college, which would help it keep its doors open. She said the church was willing to provide that line of credit to protect its collateral in the college.
Meanwhile neither side seemed to favor the possibility of the property going into a Chapter 7 bankruptcy whereby the entire holdings would be liquidated.
“I think Chapter 7 would be a last resort from a bankruptcy perspective,” said Greg Worthy, an attorney with Bryan Cave who is working with Nicholson in representing the bondholders.