The billionaire Hunt brothers, fighting to keep 23 banks from foreclosing on $1.5 billion of their property, lost a round in the battle on Thursday when a federal appeals court moved their bankruptcy cases to Dallas.
“This court orders immediate transfer of the Chapter 11 proceedings to the bankruptcy court for the Northern District of Texas (Dallas) with instructions to proceed in exactly the same manner as if the Chapter 11 proceedings had been initially filed in that jurisdiction,” the 5th U.S. Circuit Court of Appeals ruled after a hearing.
The ruling upheld U.S. District Judge Barefoot Sanders of Dallas, who had ordered the case transferred from New Orleans to his jurisdiction.
Attorneys for brothers William Herbert, Nelson Bunker and Lamar Hunt filed the Chapter 11 proceedings in a New Orleans bankruptcy court to prevent liquidation of the assets of Placid Oil Co., Placid Building & Service Co. and the William Herbert Hunt Trust Estate by 23 banks to whom they owe $1.5 billion.
A lawyer for the Hunts had argued that they should be allowed to hash out their financial problems in Louisiana because that is home for their Placid Oil.
“Placid is here because its assets are here in Louisiana,” Stephen Gordon told the appeals court.
Sanders had ruled that the New Orleans filings were in violation of his earlier ruling restricting all legal proceedings on the Hunts’ affairs to his jurisdiction. Attorneys for the Hunts appealed that ruling to the court of appeals.
The three-judge appeals court panel issued its ruling after hearing two hours of arguments by attorneys for both sides.
Hunt attorneys earlier had hinted that they might appeal to the Supreme Court if the appeals court ruling went against them.
Charles Vihon, an attorney for 14 major unsecured creditors in the bankruptcy case, said the appeals court order was a major setback for his clients.
“The unsecured creditors’ rights have been infringed upon,” he said.
Attorneys for the Hunts maintained that many of the unsecured creditors were located in Louisiana, which was one of the reasons that the bankruptcy case should be heard in New Orleans.
Before the ruling, the Hunt attorneys said the banks could recover all of their money if the bankruptcy proceedings were allowed to go smoothly. The Hunt brothers attended the hearing. The courtroom gallery was packed to standing room only with about 100 spectators.
On Wednesday, the Hunts filed a motion in Dallas trying to prevent Sanders from hearing any more of the case. The motion argued for reconsideration of the earlier motion charging Sanders with a conflict of interest and seeking his removal from the case.