John Connally was once a well known Governor of Texas. Today his name has been mostly lost to history, except for one important detail. On November 22, 1963 Mr. Connally was riding in an open limousine with President John F. Kennedy when a bullet rang out, claiming the life of President Kennedy and also seriously injuring the Governor. Mr. Connally recovered from his wounds and served out his term in office. Prior to that time Connally was a protégé of Lyndon Johnson and was Kennedy’s Secretary of the Navy. Later he became Secretary of the Treasury under President Nixon, and was a candidate for President himself. Through his involvement in Texas politics, and his alliance with Texas oil barons, he became a wealthy real estate magnate in the 1980’s. Mr. Connally, in other words, was a very well connected fellow.
According to an August 1, 1987 New York Times article, 70 year old John Connally “filed a personal bankruptcy petition in the United States Bankruptcy Court in Austin seeking protection from creditors under Chapter 11 of the Federal Bankruptcy Code.” His real estate holdings had fallen victim to the Texas oil bust of the 1980’s. Apparently Mr. Connally had never incorporated his various enterprises. According to the article, “friends of Mr. Connally had questioned why he had not incorporated his business to shield the bulk of his personal property from business creditors.”
I recall that Connally appeared on a morning news program at the time, and he said (to paraphrase) that the people with whom he did business were all friends, his agreements were made on a handshake, and that he did not feel the need to protect himself in any way.
Do not make that mistake! If you are in business or engaged in a startup enterprise, consider this an object lesson. Rule #1, incorporate your business! Whatever you own can be lost to business creditors. Rule #2, do not do business on a handshake. Your business arrangements must be spelled out. This will save you much grief and avoid misunderstandings later on.
Remember if a towering figure like John Connally can lose everything, you can too.
Stay tuned! There will be more to follow on this and related issues.
For further information on legal matters relating to your business, you may leave a message on my web site www.CalGreenberg.com. You can also e-mail me directly at Cal.Greenberg@gmail.com, or call my office at 718-324-7200.