Circling The Remains Of The Hunt FortuneWendy Zellner
His fortune all but gone and creditors picking over what's left, William Herbert Hunt recently was asked how history would remember him. "It's not over yet," he replied. The ex-billionaire and son of legendary oilman H. L. Hunt was right about that.
Only 16 months after a bankruptcy judge approved reorganization plans for Herbert and brother Nelson Bunker Hunt, the officials liquidating their estates are seeking to recover more than $100 million in assets for creditors. With their oil, real estate, and commodities empires crashing around them in the late 1980s, the brothers fraudulently shifted property and cash to benefit other family members, the trustees claim in documents filed on May 1 in federal bankruptcy court in Dallas.
The amount at stake may seem small next to claims against the brothers that originally totaled more than $2 billion. But the court-appointed trustees expect to collect only $300 million for creditors by selling the Hunts' former estates via two liquidating trusts. Creditors will get even less if the trusts can't recover the disputed assets. Most of what's collected by the trusts flows to the Hunts' No. 1 creditor, the Internal Revenue Service.
After more than a decade of litigation, the Hunts should hardly be fazed by another suit. But this one would name as defendants not Herbert and Bunker--who under the reorganization plans are immune from suits by the trustees--but their nine children and 27 grandchildren, plus spouses and trustees of the family trusts. They are the ones, after all, who allegedly reaped the benefits of the transferred assets (table) and now might be able to cough up the dough.
'PRIVATE MATTER.' The younger Hunts may face years of litigation, says Steven S. Turoff, the trustee who is liquidating Herbert Hunt's former assets. "We can't believe Bunker and Herbert would put their kids in a position like this," says R. Carter Pate, head of Bunker's liquidating trust. "This isn't Father Knows Best." Efforts to settle out of court have failed, Turoff says.
Bunker and Herbert Hunt couldn't be reached for comment. Nor would Lamar Hunt, the younger brother who may be targeted by the trustees, talk about it. "I would consider it to be a private matter," he says. Vernon O. Teofan, an attorney for some of the family trusts, and Albert G. McGrath, a lawyer for some family members, say they're reviewing the claims.
In a family that traces its roots to H. L., a bigamist with 15 children by three wives, nothing is ever simple. The trustees detail in court documents a convoluted series of deals. Despite enormous contributions to often newly created entities, the Hunt brothers typically got only small partnership interests or preferred stock in return. This shuffling reduced the value of the Hunts' holdings and removed many assets from the control of the brothers, the trustees say.
The biggest disputed deal shows how hard it is to track the Hunts' financial footwork. The trustees claim that in May, 1988, the Hunt brothers sold more than 1,000 acres of property near Carlsbad, Calif., for about $72 million. With his half of the proceeds, Herbert bought real estate in Texas and Arizona, much of it raw land. All of these properties were purchased from his children, their trusts, or family-controlled corporations.
In August, 1988, just a month before filing for bankruptcy, Herbert shifted these properties and others to three new limited partnerships controlled by his children. In exchange for contributing properties valued at about $72 million--or nearly three-quarters of the partnerships' total capital--Herbert received only a 35% limited partnership interest.If creditors were hurt by the alleged transfers, the Hunts didn't escape damage either. In one case detailed in court papers, the Hunt brothers in 1988 invested more than $11 million to drill oil in South Yemen. For less than $200,000, the children's trusts got all of the company's common stock in July, 1988, while Herbert and Bunker got just preferred shares. Today, Yemen Exploration Petroleum Co. and a sister firm have only one dry well to show for the investment.
Hunt creditors know all about dry holes. They won't hit a gusher with another suit, but they're hoping to squeeze a bit more from a once-mighty fortune.
DISPUTED HUNT ASSETS
Trustees liquidating the estates of the Hunt brothers are challenging these and other deals involving $100 million in assets. The Hunts are not commenting
BLUEGRASS FARMS RACING Trustees say Bunker Hunt transferred more than 100 stallions to Bluegrass Farms for preferred stock, then transferred his Bluegrass common to two of his kids
TABOR INVESTMENTS Herbert Hunt shifted $2.3 million to Tabor Investments, owned by him and his wife, trustees say. Tabor then moved the funds to a new partnership controlled by his kids and to trusts for his grandchildren