Tax Fight Reveals Murphy's Philosophy on Wealth

by Mark Friedman  on Monday, Sep. 27, 2010 12:00 am  

"It was a huge distress to my father," Madison Murphy said during the 2008 trial. "So much so that he backstopped some of [Chip's] loan [sic] by being a guarantor of them, infused capital into a number of his businesses, failed businesses."

Madison Murphy said that he thought that, without their father's help, Chip Murphy could have filed for bankruptcy. But their father "came into my office one day pretty distraught and said that nobody named Charles Murphy is going to declare bankruptcy if he could help it," Madison Murphy testified.

Chip Murphy didn't return a message left at his Little Rock office, and Mike Murphy couldn't be reached for comment.

Charles Murphy's reaction to the legacy asset shares being reduced was "vehement and negative," Martha Murphy testified.

"Given [Charles Murphy Jr.'s] business background, he understood the value of centralized management," she said. "So he wanted to protect the family assets, which were in individual holdings, and he wanted to centralize the management.

"He was very concerned that they not be subject to creditors," Martha Murphy said.

"He was concerned about the prospect of divorce. We had had a divorce where unfortunately a good deal of stock went out of family hands," she said, referring to Chip Murphy's divorce.

She said Charles Murphy Jr. also wanted to have future family members represented on the boards of the companies he built.

The Murphy companies don't have the kind of dual-class stock structure, A and B shares, that have allowed other founders' families to retain corporate control, which is the case with Dillard's Inc. of Little Rock and Tyson Foods Inc. of Springdale.

 

Creating the Partnership

After the sudden death of Charles Murphy Jr.'s wife in 1997, he stepped up the formation of the partnership. He wanted to maintain the Murphy stock in his various companies and talked it over with Madison and Martha.

 

 

Please read our comments policy before commenting.