Penury Without Tears
In theory, Oilman John McCandish King should be a pauper. He has lost his $170,000-a-year job as chairman of King Resources, a mineral exploration firm. That company has been forced into bankruptcy, and creditors are seeking to have Colorado Corp., a holding company that is 90% owned by King, declared bankrupt also. The Internal Revenue Service has slapped liens on his property for $5,300,000 in back taxes. Creditors, former investors, and tax authorities are suing him in at least six states to collect what is left of his personal fortune, which was once estimated to be $480 million but by King's account has shrunk to $42 million. The keystone of that fortune, King Resources stock, has dropped from $34 a share to less than $1 in two years. The onetime financial whiz of the wildcat oil drillers has asked the courts to protect him from his creditors while he tries to work out a plan to repay them.
Yet King continues to live like an emperor. He maintains a sumptuous suite of offices on the top floor of Denver's tallest building. He and his family live in the wealthy Denver suburb of Cherry Hills Village on a baronial walled estate complete with guest wing, offices, swimming pool and a live-in servant. For recreation, the Kings maintain a mountain retreat in Vail, Colo., a home in Palm Springs, Calif., and an island estate on Maui, Hawaii. He drives a radio-equipped Cadillac, maintains an extensive collection of antique guns, wears monogrammed shirts and cowboy boots, and boasts several hundred pairs of cuff links, many of them solid gold. "My life-style has not changed in ten years," King has been heard to claim.
How has King been able to retain the trappings of success while facing the fact of failure? As courts and tax investigators across the country unravel the intricacies of King's finances, the story behind his comfortable penury is beginning to emerge. King's decline began in mid-1970 with the much-publicized collapse of Bernard Cornfeld's Investors Overseas Services; in 1969 I.O.S. had provided King Resources with 35% of its revenues by buying oil-exploration and drilling services. As Cornfeld's empire foundered, worried creditors began pressing King Resources and Colorado Corp. for repayment of loans, and King was besieged by his personal creditors. When he filed to reorganize under federal bankruptcy laws last June, his 218-page petition listed 451 creditors ranging from the IRS to a Granby, Colo., drugstore ($1,000 for beer and penny candy).
Wife's Jewelry. King was well prepared. In mid-1968 he formed the first in a series of trusts for his four children, ages six to 14, with Mercantile Bank & Trust Co. in the Bahamas as trustee. He transferred a major chunk of his Colorado Corp. stock to the trusts, along with his four homes, some real estate on the island of Bali, his gun collection and his wife's jewelry. Investigators have been unable to determine the actual size of the trusts. Creditors are looking for ways to tap them, but the trusts may be untouchable because they are in the children's names.
King even exudes confidence about his chances of making a business comeback. His companies were in serious financial trouble in 1958 and again in 1963, but both times he managed to borrow enough money to save them. This time he is counting on some big oil and gas ventures in the Canadian Arctic and the Sinai Desert to come through for him.
Even King, however, admits that these projects will not pay off for years. Until then, the key to his potential financial resurrection is credit, and the Denver business community feels that King is nearing the end of even his resources for obtaining it. The institutional lenders who bailed him out twice before are probably too concerned now about collecting the $22 million he already owes them to give any thought to lending him more. King has already hit his trusts for nearly $5,000,000 in loans in an attempt to keep his companies afloat; it is possible that the trusts may not have much more to lend.
Even if King really is finished as a business power, though, he has indicated to associates that the trusts retain enough assets to support his lavish life-style indefinitely. Meanwhile, King manages to sound as if he were actually enjoying bankruptcy; he notes to friends that he has put on weight recently. "In life," he tells visitors who question the pleasure of fighting 451 creditors, "everything happens for the best if you look for it. Right now, I am having more fun than I have had in a long time."
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