CHK Chesapeake Energy Corporation

By Ryan Dezember and Kevin Helliker 

Duke University made a claim on the estate of oil magnate Aubrey McClendon, saying the Chesapeake Energy Corp. co-founder died before he could make good on roughly $10 million of pledges.

Mr. McClendon, who graduated from Duke in 1981, became a major benefactor of the North Carolina college after he struck riches in the oil patch. When he died in March in a car crash in Oklahoma City, Mr. McClendon had unfunded commitments to Duke totaling $9,942,000, the university said in a probate court filing that became public late Tuesday.

That figure represents roughly half of the $18.75 million that Mr. McClendon pledged to Duke in recent years for athletics funds, scholarships and campus- improvement projects, according to the filing.

A Duke spokesman declined to comment. Tom Blalock, a longtime associate of Mr. McClendon who is administering his estate, didn't respond to requests for comment.

Mr. McClendon's creditors, which so far range from Wall Street banks to a former employee to an agricultural-equipment maker, have until Sept. 16 to file claims against the estate, which is being unwound in an Oklahoma City district court.

The famous wildcatter left behind a vast tangle of assets and liabilities when his speeding Chevy Tahoe crashed into a concrete underpass the morning of March 2. He had been ousted from Chesapeake over corporate-governance issues three years earlier and had leveraged many of his personal holdings to finance a comeback bid.

Collapsing oil prices in late 2014 strained the new oil-and-gas empire he had assembled, and he struggled in his final year to raise more cash to keep it afloat.

Oklahoma records show he had pledged assets as collateral for loans including his roughly 20% stake of the Oklahoma City Thunder basketball team, fine wine, investments in tech startups and antique boats.

Lawyers for Mr. McClendon's creditors have said they think Mr. McClendon, who during his Chesapeake heyday was a billionaire, left behind more debt than assets.

"Based on information we have thus far, we believe this is an insolvent estate," Arthur Hoge III, a lawyer representing Wilmington Trust Corp., said in a May hearing in Oklahoma City. Mr. Hoge said Mr. McClendon died owing his client, a unit of M&T Bank Corp., more than $465 million.

Martin Stringer, a lawyer for Mr. McClendon's estate, said claiming it

is insolvent is "incorrect" because "nobody has the facts," according

to a transcript of the hearing. The value of many assets "depends on

commodity prices," he added. He said that the estate includes

interests in more than 180 companies and other business ventures.

Duke's claim is unique in that it is the only one yet tied to the oilman's charitable giving, for which he was well known in his hometown and at his alma mater.

At Duke, Mr. McClendon met his wife, Kathleen McClendon, who graduated in 1980. The couple sent each of their three children there. He built Chesapeake's Oklahoma City headquarters, with rows of redbrick Georgian buildings, in the image of Duke's Durham, N.C., campus.

Mr. McClendon's largess was well known at Duke. McClendon Commons is adjacent to an admissions office. The McClendons gave at least $1.2 million for the restoration of a massive pipe organ in the university's chapel now known as the Kathleen Upton Byrns McClendon organ. The university in 2002 tried to memorialize the couple with a pair of gargoyles carved in their likenesses and installed above an entrance to McClendon Tower, a dormitory, but the couple insisted they be removed, according to local news reports at the time.

Mr. McClendon's gifts to Duke exceed $20 million, according to a person familiar with his giving.

It is unclear whether Duke will be able to collect the outstanding pledges. Besides the estate's solvency, there will be a question whether there was a contract between Duke and the donor, said Richard Marker, a professor of philanthropy at the University of Pennsylvania and New York University, who added that he knows nothing about Mr. McClendon's pledge to Duke. "If there's a signed letter of commitment," he said, "generally speaking, that's considered legally binding."

But even if Duke's legal position is strong, pursuing it aggressively might be counterproductive, said Doug White, former director of the nonprofit management program at Columbia University and an author of books on philanthropy. "How positive is it to see a university sue a donor?" he asks. "The attorneys at Duke aren't going to take that into account. But the fundraising office or president's office ought to take that into account."

Write to Ryan Dezember at ryan.dezember@wsj.com and Kevin Helliker at kevin.helliker@wsj.com

(END) Dow Jones Newswires

August 24, 2016 05:44 ET (09:44 GMT)

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