(2 of 4)
The Hunts will appeal Sanders' ruling, and they immediately demanded that the judge be disqualified from hearing their case. Their court petition argued that "one cannot be blind to the background of long-standing philosophical and political differences between the honorable Barefoot Sanders and . . . members of the Hunt family." But Sanders refused to remove himself from the case.
The Hunts' current crisis began last March when Placid, an oil exploration and development firm, defaulted on some $1.1 billion in bank loans. The Hunts and their lenders had not been able to agree on a plan to renegotiate the debt. The Hunts wanted Placid to hold off on making any bank payments so that the company could go ahead with aggressive off-shore drilling projects. The brothers were especially keen to develop a tract called Green Canyon, off the coast of Louisiana in the Gulf of Mexico. But the bankers insisted that Placid should accelerate, not halt, its debt payments.
Then the Hunts took the offensive. The brothers filed two suits against their bankers, charging them with "conspiring to dismantle and ultimately destroy" Hunt interests. They asked for some $14 billion in damages. The maneuver made sense. Indeed, suing one's lenders is becoming an increasingly common negotiating tactic among debtors. It often forces the creditors to settle at terms more favorable to the debtors.
The Hunts' downfall was in the making long before the oil slump. Their troubles go back to 1979, when Bunker and Herbert began hoarding silver. They ultimately amassed some 59 million oz. of the precious metal, which seemed a shrewd move as the price of silver climbed to a high of $50.35 per oz. in January 1980. It was a gamble characteristic of the sons of H.L. Hunt, who once made a living as a cardplayer. But this time the Hunts' luck ran out. When the silver price plummeted to $10.20 per oz. two months later, the Hunts were suddenly left with a debt of $1.5 billion. Shrugged Bunker Hunt: "A billion dollars isn't what it used to be."
To pay off their silver-related debt, the Hunts borrowed $1.1 billion. Eventually they owed money to banks ranging from Texas institutions to New York's Citibank, the Bank of Nova Scotia and the Bank of Scotland. To secure the loans, the Hunts pledged as collateral much of their wealth, including assets from Placid Oil, their main holding company.