DALLAS — The billionaire Hunt brothers said a judge should be removed from their cases for lack of impartiality after he ordered them to move their bankruptcy proceedings from New Orleans to Dallas.
U.S. District Judge Barefoot Sanders issued the order Thursday. The Hunts' spokesman, Joe Grillo, responded that Sanders' ownership of a large amount of Texas bank stock "leaves some doubt about the judge's impartiality" in the Hunts' proceedings.
Placid Oil Co., the William Herbert Hunt personal trust and Placid Building & Service Co., which owns 27% of a downtown Dallas office tower, filed petitions under Chapter 11 of the U.S. Bankruptcy Code last Friday in New Orleans to stave off foreclosures by banks seeking payment of $1.5 billion in debts.
Embroiled in Lawsuit
The Texas brothers are also embroiled in a $14 billion lawsuit against 23 banks, claiming a conspiracy by the lenders in refusing to refinance loans to the Hunt businesses.
As a result of that suit, filed in July, Sanders had issued an order that the Hunts must file any other lawsuits in Dallas or seek the court's permission to file elsewhere. He said they had time to seek permission before filing the bankruptcy petitions in New Orleans.
Sanders has reported owning between $100,000 and $250,000 worth of stock in Allied Bancshares, Houston. The bank is not one of the Hunts' creditors, but "having stock in any bank, particularly a Texas bank, is improper and leaves some doubt about the judge's impartiality," Grillo said.
Stephen Gordon, one of the lawyers representing William Herbert, Nelson Bunker and Lamar Hunt, said it would be very inconvenient to bring witnesses to Dallas. He said an appeal of Sanders' order would be filed with the 5th U.S. Circuit Court of Appeals in New Orleans.
The banks contend the bankruptcies can be handled more efficiently in Dallas, and Sanders said that the largest unsecured creditors are in Texas, while only one of the top 20 creditors is from Louisiana.
Sanders gave the Hunt companies a deadline of noon next Thursday for filing their motion to transfer the cases and required daily status reports on their compliance.