June 14, 2010
Andrew Ross Sorkin writes that lawyers and investment advisors are already contemplating a potential bankruptcy for BP. According to Sorkin, some on Wall Street are already strategizing ways to use a “pre-packaged bankruptcy” to push BP’s clean-up costs and spill-related liabilities into a separate entity. The remaining “cleaned-up” assets would be sold to an industry-rival.
Sorkin calls this the “Texaco Scenario”.
In 1987, Texaco, saddled with a $1 billion judgment, filed Chapter 11 to escape paying this debt. What remained was later bought by rival Penzoil.
Running a search of ti(texaco) & bankrupt! in TP-ALL will bring you to 21 articles. Some of the titles include, “Texaco !! – Rethinking Environmental Claims in Bankruptcy”, “Bankruptcy Filing Nixes Shipyard Worker’s Cancer Claim” and “Treatment and Discharge of Environmental Obligations – Chapter 11 Reorganization”.
As BP’s bills mount, so too will additional calls for more dividend suspension, additional fines and heavier penalties. Sorkin may be spot-on in predicting what could become a phenomenally large and complex corporate bankruptcy.