DALLAS — Millionaire brothers Cullen Davis and Ken Davis have agreed to voluntary reorganization of a chunk of their business empire, averting an effort by creditors to immediately force repayment of millions of dollars in loans.
Attorneys for the Fort Worth brothers filed documents in U.S. Bankruptcy Court in Dallas on Tuesday agreeing to the reorganization of Kendavis Holding Co. under Chapter 11 of the U.S. Bankruptcy Code.
The brothers are also expected to agree to the reorganization of Kendavis Industries International, a management subsidiary of Kendavis Holding, a bankruptcy court trustee said Wednesday.
Creditors say the two companies owe more than $300 million, and eight banks tried to force the companies into involuntary bankruptcy in a petition filed Feb. 21.
After 18 months of intensive negotiations, the banks said they failed to reach a refinancing agreement with the Davis companies.
George McElreath, assistant U.S. trustee who oversees such proceedings for the court, said Wednesday that he had received the Davis' consent order to reorganize the second company as well.
But by late Wednesday, the paper work had not shown up at the bankruptcy clerk's office in Dallas, officials said.
"The filings give them 120 days to propose a plan of reorganization," McElreath said.
Cullen and Ken Davis are listed among the 400 wealthiest Americans by Forbes magazines. Kendavis Holding is an umbrella company for at least 52 other corporate entities.
The business empire includes energy exploration, equipment and services, rubber products, lighting fixtures, air conditioning and heavy equipment.
When the banks filed the involuntary bankruptcy petition in February, Ken Davis called the proceeding "imprudent and unnecessary" and said the companies had a positive cash flow.
Creditors said the Davis brothers had failed to meet their financial obligations.
In court documents on file in Dallas, the banks say the Davis business empire has lost $132 million over the last two years and is headed for "substantial losses" in 1985.
The banks want permission to monitor the business activities and examine financial records of Kendavis Holding and Kendavis Industries International.
On Wednesday afternoon, Kendavis spokesman David Sturgiss declined to comment on the company's financial condition and on bankruptcy proceedings because he said he had not been briefed by company attorneys.
The attorneys could not be reached for comment.
So far, no bankruptcy petitions have been filed against any of the other corporate entities under the Kendavis umbrella and business at various Kendavis companies has continued.