Former U.S. Treasury secretary John B. Connally and his partner are being sued for repayment of a $10.9 million loan for which they allegedly signed personal guarantees.
The lawsuit, filed Wednesday in Dallas by General Electric Credit Corp., alleges that the former Texas governor and his partner, former lieutenant governor Ben Barnes, signed guarantees for a loan granted in 1984 to Fry Road Associates Ltd. of Austin, Tex., owner of a Houston shopping center.
Fry Road Associates filed for protection from its creditors under Chapter 11 of federal bankruptcy laws on June 2, according to GE Credit, which is a division of General Electric Co. The federal lawsuit contends the debt is in default and that Connally and Barnes should be required to make full payment.
However, James A. Lindsey, partnership manager for Barnes-Connally, said he and his wife -- through the Austin firm of Columbia Constructors Inc. -- replaced Connally and Barnes as general partners in Fry Road Associates the day before the Chapter 11 filing.
Lindsey said his receipt of the general-partnership interest in the venture was conditioned upon his assumption of the existing debt. And he said, "A loss has got to be established for GE Credit to pursue the suit , and right now there's not a loss."