If Tom Benson is going to cut his now-estranged daughter and grandchildren off from any future involvement with the Saints and Pelicans, he needs to remove shares of the sports teams from a group of trusts benefiting his relatives and replace them with assets of equal value.
Benson and his lawyers believe he has the assets necessary to pull that off. But it’s become clear that a Texas judge disagrees.
“The asset swap ... likely cannot happen,” Bexar County, Texas, Probate Court Judge Tom Rickhoff wrote in a March 9 letter to the two men he appointed to oversee a trust he temporarily suspended Benson from managing. “The sports teams’ value is increasing too fast and is too high compared to (Benson’s) remaining wealth.”
Rickhoff’s thoughts won’t have any bearing on the final outcome of Benson’s efforts to swap out the trusts’ assets; that issue is in front of a federal judge in New Orleans. But they offer insight into how one legal mind interprets that aspect of the Benson family feud.
Nonetheless, one of Benson’s lawyers, Paul Cordes, on Thursday said his client “is fully capable of performing on the swap when all the values (of relevant assets) are nailed down,” which is an ongoing process.
“To the extent that anyone would take anything in Judge Rickhoff’s letter to suggest Mr. Benson can’t perform (the swap) is conjecture,” Cordes said. “And that conjecture — with all due respect to the judge — would be wrong.”
A group of trusts set up to benefit Benson’s daughter, Renee, and her children, Rita and Ryan LeBlanc, contains nonvoting ownership shares in New Orleans’ NFL and NBA franchises. The trusts — meant to protect his relatives from having to pay estate taxes on their inheritances — are irrevocable, meaning that Benson cannot add or remove the beneficiaries, but he can remove assets from them as long as he substitutes something of equal value.
Benson is proposing to pull the relatives’ shares in the Saints, Pelicans and other businesses out of the trusts in exchange for $449 million in secured promissory notes and the cancellation of $94.5 million in debt. The collateral for the notes would include the Saints and Pelicans franchises themselves.
However, the Benson-appointed overseer of those trusts — Robert A. Rosenthal — has said that would not be a fair exchange at the moment. He said he could not consider any offer a fair exchange until Benson provided updated valuations of the teams and his other assets.
Lawyers for Benson — who is the owner of all voting shares in his sports teams, estimated by Forbes to be worth almost $2 billion combined — said those valuations were ongoing. They then sued Rosenthal in federal court in New Orleans, asking Judge Jane Triche Milazzo to allow Benson to extract the shares in the Saints and Pelicans from the group of trusts benefiting Renee and her children.
That lawsuit is pending.
Rickhoff offered his personal opinion about Benson’s prospects of pulling off the asset swap after part of the feud landed in his courtroom.
After learning her billionaire father wanted nothing more to do with her, one of Renee’s moves was to ask Rickhoff to suspend Benson as overseer of a trust created for her benefit by her mother — Benson’s first wife, Shirley — who died in 1980. That trust is not part of the group overseen by Rosenthal.
Rickhoff suspended Benson as overseer of the trust created by Shirley Benson and temporarily gave that role to former San Antonio Mayor Phil Hardberger and estate lawyer Arthur Bayern.
Benson’s lawyers appealed Rickhoff’s decision, saying it turned “Texas law on its head.” Meanwhile, Hardberger and Bayern sued Benson but then withdrew that action Wednesday at Rickhoff’s request.
In his letter to Bayern and Hardberger, Rickhoff said, “Big businessmen are still just like all of us and cannot just sign whatever they want and think if it goes south, ‘I’ll just litigate.’ ”
Because the disagreement between Benson and Renee and her children has spurred numerous civil actions in state and federal courthouses in New Orleans and Texas, Rickhoff said, “The case has reached the dreaded Dickensian Kerfuffle door where litigation endlessly seeks side corridors.”
Nonetheless, he wrote to Hardberger and Bayern, “You don’t need to do anything, nothing can come from nothing, you should just wait.”
The judge — who tasked Hardberger and Bayern with completing an inventory of the assets and liabilities associated with the Shirley Benson-created trust — then told them they don’t need to get involved in Benson’s attempt to swap assets. Odds are that attempt will ultimately fail, he said in passing.
Cordes said Rickhoff formed his opinion without having all of the sports owner’s financial information.