Hit by Texas Hard Times, Connally Asks Bankruptcy

AUSTIN, Tex. — John B. Connally, a three-time Texas governor and a Cabinet member under two presidents, filed personal and business bankruptcy papers Friday.

Connally made the filings in U.S. Bankruptcy Court here, said Bob Williams, U.S. District Court deputy clerk.

Barnes-Connally Partnership, which Connally formed with former Lt. Gov. Ben Barnes, filed for liquidation under Chapter 7 of the bankruptcy laws, while Connally filed under Chapter 11 for protection from creditors.

During Boom Years

The business, primarily real estate development, was formed during the boom years in the early 1980s. It struggled after Texas’ economic boom went bust.

From 1981 to 1986, Connally and Barnes borrowed heavily and built $200-million worth of office buildings, shopping centers, houses and apartments in Texas and New Mexico.

The collapse of oil and gas prices and a soft real estate market left Connally and Barnes struggling to pay a debt they estimated at $170 million.

On Gulf Coast

Among the partnership’s developments were the troubled Estates of Barton Creek in Austin, as well as projects on South Padre Island on the Texas Gulf Coast and in Houston. They also had a condominium development in New Mexico.

The bankruptcy filing listed about 300 creditors.

In a statement, Connally said his assets would be auctioned off to help pay creditors.

Connally, 70, and his close friend and political partner, the late President Lyndon B. Johnson, were dominant forces in Texas politics for years until the early 1970s.

Popularity Wanes

But after Johnson’s death in 1973, Connally switched from the Democratic to the Republican Party, and his popularity waned.

The following year, he was indicted by a Watergate grand jury, but he was acquitted of charges that he accepted a $10,000 bribe from milk producers to persuade President Richard M. Nixon to raise price supports.

Connally served as U.S. Treasury secretary under Nixon and was secretary of the Navy under President John F. Kennedy. He was injured in the Nov. 22, 1963, assassination of Kennedy.

He was an unsuccessful candidate for the Republican presidential nomination in 1980.