Judge Gives Major Creditors Two Weeks to Reach Compromise
DALLAS (AP) _ A federal bankruptcy judge says he will give major creditors two weeks to work out a compromise or he will convert ex-billionaire William Herbert Hunt’s Chapter 11 bankruptcy case to a Chapter 7 liquidation.
Bankruptcy Judge Harold Abramson Monday cited the continuing drain on the estate in announcing he would convert the case to Chapter 7 on Nov. 20.
The ruling gives major creditors just two weeks to work out a compromise that they have failed to reach since the oilman and son of the late H.L. Hunt filed for bankruptcy in September 1988.
″We were happy the judge gave us two weeks to fix it. He could have just converted it today,″ said Stephen McCartin of Gardere & Wynne, Hunt’s attorney.
Other attorneys weren’t so optimistic, saying privately that they doubted the gap between two major creditors in the case could be bridged in such a short time.
If it is converted to Chapter 7, the remaining assets of Hunt’s once vast estate would be sold off rapidly, with most of the proceeds going to the Internal Revenue Service, the largest creditor in the case with a claim of $300 million in back taxes.
The judge also said the continued litigation facing the estate was drying up what few proceeds remained.
″The court cannot continue to sit by idly while this continues,″ Judge Abramson said.
Under bankruptcy procedures, creditors and the debtor file reorganization plans and try to reach a consensus on repayment of debt. Plans have been filed by Hunt and three major creditors. But the judge said Monday that none of the reorganization plans before him were confirmable.
The ruling has no impact on Herbert’s brother, Nelson Bunker Hunt, who also sought protection from creditors under Chapter 11 last year.
Herbert Hunt, who was on hand with his wife, Nancy, to hear the decision, has assets currently valued at $125 million to satisfy debts of nearly $900 million, bankruptcy court filings show.
A Chapter 7 liquidation of Herbert Hunt’s estate would reap $60 million to $70 million, or roughly half the $125 million that would be divided among creditors under Chapter 11 of the federal bankruptcy code.
Hundreds of smaller creditors would get nothing if the estate is liquidated under Chapter 7, attorneys involved in the case say.
″I am quite disappointed. I think this is a disaster for the unsecured creditors,″ said Claude D. Montgomery, attorney for the bankruptcy trustee in the Hunt International Resources Corp. case.
″The stuff in this estate is incredibly illiquid,″ said Thomas O. Gorman, an attorney representing Minpeco S.A., a major creditor in the case. ″It just depends on whether they have to sell it all tomorrow.″
The ruling was prompted by the ongoing dispute between Minpeco, a mining concern owned by the Peruvian government, and Manufacturers Hanover Trust Co., a New York bank that has a $36 million claim in the case.
Manufacturers Hanover says its claim should have priority over a $132 million judgment Minpeco is trying to collect from the two Hunt brothers. The judgment, which has swelled to more than $250 million with interest and attorneys fees, stems from the Hunt’s silver conspiracy case.