Judge approves sale of Morris Brown land to City of Atlanta, Friendship

By Maria Saporta

U.S Bankruptcy Judge Barbara Ellis-Monro Wednesday afternoon approved the $14.6 million sale of Morris Brown College’s property to the City of Atlanta and Friendship Baptist Church.

She also over-ruled the objections filed by Clark-Atlanta University, which had argued that Morris Brown College did not have the right to sell most of the property.

The ruling is a major step that will take Morris Brown College out of bankruptcy, and one that could pave the way for the redevelopment of more than 30 acres of land along Martin Luther King Jr. Drive that is a few blocks west of the new Atlanta Falcons football stadium.

After the ruling, the City of Atlanta issued the following the statement applauding Judge Ellis-Monro’s ruling:

Invest Atlanta and Friendship Baptist Church intend to support the continued growth and economic development of West Atlanta, while simultaneously allowing Morris Brown College to continue its historic educational mission.

Through this purchase, Invest Atlanta’s and Friendship’s involvement will:
*             Allow Morris Brown College to retain a campus as it emerges from bankruptcy, facilitating a means for it to continue its core mission of educating the community and respecting its historic legacy.
*             Insure the continued stable and cohesive development of the West Atlanta community.
*             Provide a coordinated framework for the development of these important parcels, in conjunction with other redevelopment initiatives along the Martin Luther King, Jr. corridor.
*             Provide a model for how governments and private institutions can work together, along with the community, to ensure stable, smart and sustainable growth and development.
*             Showcase Invest Atlanta’s and Friendship’s continued commitment to the West Atlanta neighborhood and surrounding communities.

Morris Brown College filed for bankruptcy in August 2012 with about $30 million in debt. Since that time, the college has entered in several aborted negotiations to sell its property. Finally, earlier this year, it hired the real estate firm of Jones Lang LaSalle (JLL) to market the property.

Morris Brown's historic Fountain Hall

Morris Brown’s historic Fountain Hall (photo by Maria Saporta)

The “highest and best” bid that was submitted came from a joint bid made by the City of Atlanta’s economic development arm — Invest Atlanta, and Friendship Baptist Church. Under that proposed sale, Morris Brown would be able to continue to a couple of historic properties on the 37-acre land holding to continue operating as an institution for higher learning.

But Clark Atlanta University filed a legal objection to the sale. About 17 acres of that property used to belong to Clark Atlanta, and the land was transferred to Morris Brown with one condition. It the property were to ever cease being used for educational purposes, the ownership would revert back to Clark Atlanta.

Judge Ellis-Monro did not dispute that Clark Atlanta holds the reversionary rights to that land.

But she said that all the parties involved — specifically Morris Brown and the City of Atlanta — acknowledge that Clark Atlanta holds those reversionary rights.

“The purchaser is clearly aware of this issue,” the judge said. “The Court realizes that it can only sell what it has interest to sell.”

She cited several cases where properties have been sold by quit claim deeds that contain all the restrictions that existed before the sale. She did not agree with the arguments presented by Clark-Atlanta’s attorneys that the reversionary rights would be triggered by the sale of the land to the City of Atlanta.

The judge said Morris Brown “can sell its interest, whatever its interest might be.”

She did acknowledge that Clark-Atlanta might seek to get greater clarification of its property rights from the state court, where the matter would best be resolved.

Judge Ellis-Monro, however, said the sale would help Morris Brown College move forward as it works its way out of Chapter 11 bankruptcy.

”The current sale is in the debtor’s best interest,” she said, adding that now Morris Brown College could seek accreditation, which it lost in 2003. “With accreditation, the debtor would be able to increase its student body, which has been about 30 students.”

Judge Ellis-Monro said the sale was key to getting Morris Brown out of bankruptcy, and while she was over-ruling Clark-Atlanta’s objections, she said she was not making a finding of fact on whether the university had an interest in the property.

“The debtor can sell whatever interests it has subject to further litigation between the debtor and CAU,” she said.

But she did stipulate that the proposed sale order must state that the Court was not ruling on the issue of reversionary rights. She said she would need to review the wording in the sale order before giving her final approval.

The board of Invest Atlanta is scheduled to hold a board meeting Thursday morning to approve the purchase of the Morris Brown property. The closing for the purchase of the property could happen as soon as June 23.

Maria Saporta, Editor, is a longtime Atlanta business, civic and urban affairs journalist with a deep knowledge of our city, our region and state.  Since 2008, she has written a weekly column and news stories for the Atlanta Business Chronicle. Prior to that, she spent 27 years with The Atlanta Journal-Constitution, becoming its business columnist in 1991. Maria received her Master’s degree in urban studies from Georgia State and her Bachelor’s degree in journalism from Boston University. Maria was born in Atlanta to European parents and has two young adult children.

3 replies
  1. Burroughston Broch says:

    The City found a compliant judge to do their bidding. Look for more litigation about the reversionary rights.
    Also look for Morris Brown to quietly wither away after the sale.Report

    Reply
  2. Guest says:

    It may very well turn out that Invest Atlanta is about to pay $10.3 million and actually receive no rights in the subject property.
    No one in the private, commercial real estate sector would be this foolish – only Kasim Reed is this stupid.Report

    Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

What are your thoughts?

This site uses Akismet to reduce spam. Learn how your comment data is processed.