Billionaire Hunts Put Oil Firm in Bankruptcy Court : Act to Block Foreclosure by 23 Banks

The embattled billionaire Hunt brothers, struggling to hang onto their empire in the worldwide depression of oil prices, filed for protection in federal bankruptcy court today to shield their oil company from bankers.

The Chapter 11 bankruptcy petition for Dallas-based Placid Oil Co. and its real estate subsidiary was the latest move in years of wheeling and dealing designed to save one of the nation’s legendary fortunes, beginning with the 1980 silver debacle.

Without the court protection, Hunt assets, including the brothers’ downtown Dallas office tower, would have been auctioned off as early as Tuesday.

Nelson Bunker Hunt, William Herbert Hunt and Lamar Hunt are behind on $1.5 billion in loans but have charged that 23 banks conspired to wreck Placid and its sister firm, Penrod Drilling Co. The banks deny any wrongdoing and say they only want repayment of the loans.

Hunt spokesman Keith Burton said that the family has not decided what action to take regarding Penrod but that a bankruptcy petition was being considered.

‘To Ensure . . . Profitability’

Placid President Dan Brown said in a statement that the filing “was necessary to ensure the viability and profitability of Placid until such times as the litigation can be concluded.”

In its court filing, Placid listed assets of $2 billion and liabilities of $979 million. Brown said the company would proceed with “business as usual.”

The two companies employ 20,000 people and are among the largest energy firms in the world.

Placid’s papers were filed in U.S. bankruptcy court in New Orleans because most of the privately held company’s domestic assets are in Louisiana or offshore in the Gulf of Mexico, Brown said.

The brothers, heirs to flamboyant wildcatter H. L. Hunt, allege that the 23 banks are trying to corner the offshore drilling market by putting the two companies out of business and have filed suits seeking $14 billion from the banks.

Hard Times Since Oil Plunge

H. L. Hunt was a Texas gambler who parlayed a $5,000 inheritance into one of the world’s great oil fortunes, and his sons have carried on his sometimes eccentric, sometimes wild ways.

But the brothers have fallen on hard times since the worldwide plunge in oil prices. Assets such as drilling rigs and leases once valued at $2 billion or more now are said to be basically worthless.

The Hunts acknowledge that if they are forced to liquidate to repay the $1.5 billion in loans, Placid and Penrod will be “destroyed.”

Analysts said the Hunts’ suit against the banks is most likely a stalling tactic, and on Wednesday U.S. District Judge Barefoot Sanders in Dallas denied a Hunt request to postpone the foreclosures.

Still, Burton said, the family will fight to save its embattled companies.

Won’t Aid Dismantling

“Placid has made it clear it’s not going to be party to a dismantling,” he said.

The Hunts’ financial woes began surfacing years ago when Bunker and Herbert lost $1.6 billion in the 1980 silver crash. The brothers had bought 59 million ounces of silver, then estimated at one-third of the world supply. Bunker, after his silver losses, simply shrugged and said, “A billion dollars isn’t what it used to be.”

In 1982, however, Bunker began auctioning off agriculture equipment. In February, 1985, the government ordered the family to pay $200 million in back income taxes. In March, 1985, Hunt International Resources Inc., a major sugar refiner, defaulted on $225 million in debt.

The reserves, refineries and pipelines of Placid, estimated to be worth about $2 billion in 1980, fell 25% in the oil crunch of 1982 and have lost an additional 50% in the recent price plunge.