CHK Chesapeake Energy Corporation

By Ryan Dezember 

In early 2008, now-deceased Oklahoma oil man Aubrey McClendon pledged nearly a million dollars to the Ronald Reagan Presidential Foundation as part of its drive to raise money for the celebration of what would have been the former president's 100th birthday, according to court papers.

But later that year, the financial crisis diminished Mr. McClendon's fortune by sending commodity prices and shares of the energy giant he co-founded, Chesapeake Energy Corp., into a tailspin.

Mr. McClendon, according to papers the foundation filed in his probate case, never made the first of his planned donations, a $175,000 installment scheduled for the end of 2008. In the years that followed, the organization says, it has only received $15,000 of the $975,000 that he promised before he died last year in an Oklahoma City car crash. Now, the foundation is pursuing the rest.

The nonprofit, which runs the Ronald Reagan Presidential Library and Museum in Simi Valley, Calif., has asked the judge overseeing the unwinding of Mr. McClendon's estate to reconsider its request for $960,000 after its claim was rejected by lawyers representing the oilman's estate, according to filings made in Oklahoma City district court.

In a probate matter, lawyers for the deceased can reject a claim, and claimants can ask a judge to revisit that decision.

Mr. McClendon's death has raised questions about how aggressively recipients of pledges should pursue money that had been promised before a person's death. Lawyers say that while universities and nonprofit groups are within their rights to pursue unfulfilled pledges, the aggressive pursuit of them can endanger their ability to secure firm commitments from potential donors down the line and alienate the heirs of benefactors.

Last year, Duke University sought nearly $10 million that Mr. McClendon had promised to the school, his alma mater, but hadn't paid before he died last March. Duke withdrew its claim after it was reported by The Wall Street Journal. "While submitting such claims is generally a routine procedure, in this case our action was misperceived as adversarial to the McClendon family, which was never the intention," a Duke spokesman said after the university dropped its claim.

Charitable pledges are often legally binding if they've been made in writing, lawyers say. Documented pledges typically have standing similar to claims from other unsecured creditors in estate cases like that of Mr. McClendon, according to legal experts.

Nonprofit groups are among the many creditors who have emerged in Oklahoma City probate court claiming debts owed by the late wildcatter, who borrowed heavily to finance new oil and gas ventures after he was ousted from Chesapeake in 2013. His strained financial situation doesn't appear to have slowed his philanthropy, which was famous in his hometown and in Durham, N.C., where he and his wife had given more than $20 million to Duke.

Lawyers untangling the web of assets and liabilities he left behind have generally rejected claims stemming from unfulfilled charitable pledges, court records show.

A pair of claims made by the Boy Scouts of America, for $500,000 and $5,000, were rejected in August. So was a $7,500 claim from the Arts Council of Oklahoma City, which said an oil-and-gas venture launched by Mr. McClendon after leaving Chesapeake had agreed to sponsor a local arts festival this year but never sent a check.

The Reagan foundation appears unusual thus far in that it pushed back against rejection, according to court records. Lawyers for Mr. McClendon's estate rejected the claim in a November filing without giving reason, court records show.

In a September letter to the lawyers representing Mr. McClendon's estate, Glenn Baker, who was then the Reagan foundation's finance chief, wrote that the group was made aware of the estate's call for creditors through another energy tycoon, T. Boone Pickens. Mr. Pickens, one of the organization's trustees, had solicited and secured Mr. McClendon's pledge, Mr. Baker wrote.

A spokesman for Mr. Pickens, Jay Rosser, confirmed the account and said Mr. McClendon made the pledge around the time he met Nancy Reagan at a fundraiser at Mr. Pickens's North Texas ranch.

The foundation's letter was part of Dec. 30 filing that was first made public this week.

At the time of his pledge, Mr. McClendon had shot to fame and become a billionaire by embracing new drilling techniques including hydraulic fracturing, or fracking, to coax a flood of natural gas from shale rock formations. The newly minted billionaire agreed to donate $975,000 to the celebration of the late president's hundredth birthday, planned for 2011.

The foundation included in its request a one-page agreement addressed to former first lady Nancy Reagan, who died last year, pledging the sum in five chunks, beginning with $175,000 to be paid by the last day of 2008 and subsequent $200,000 payments for four years after.

"While he was never able to make any of the payments due to his business circumstances, he consistently reaffirmed his intention to eventually pay it, both to the foundation and to Boone directly," Mr. Baker wrote. "While we have not included it here, we do have evidence of Aubrey's continuing intention to pay this pledge once his financial situation improved."

Mr. McClendon did eventually send some money to the Reagan foundation, paying $10,000 in late 2014 and $5,000 the next year, according to a court filing.

Write to Ryan Dezember at ryan.dezember@wsj.com

(END) Dow Jones Newswires

January 12, 2017 11:28 ET (16:28 GMT)

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