Texaco Seeking To Disband Chapter 11 Committee Co-Chaired By Pennzoil
NEW YORK (AP) _ Texaco Inc. on Monday asked the trustee handling its Chapter 11 bankruptcy reorganization to disband the committee representing oil industry creditors, including court foe Pennzoil Co.
U.S. Trustee Harold D. Jones met with counsel for Texaco and for committees representing its industry creditors, general creditors and shareholders. Jones termed the meeting ″preliminary″ and said he did not know when a decision on Texaco’s request would be made.
The committees were asked to submit written responses to the proposal by Oct. 14.
Texaco is appealing a Texas state court jury’s order that it pay $10.35 billion in damages to Pennzoil for wrongly interfering in Pennzoil’s attempted merger with Getty Oil Co. in 1984.
Texaco in April filed for Chapter 11 bankruptcy protection from creditors to void a state requirement that it post a potentially ruinous $12 billion security bond in order to appeal the judgment.
The jury award to Pennzoil, which is co-chair of the industry committee, represents the bulk of the money owed to those on the eight-member panel. The bankruptcy court has said the remaining claims, totaling about $11 million, may be paid by Texaco.
Texaco claims that having an industry creditors committee in addition to a general creditors committee has inflated the company’s legal and administrative expenses, by requiring it to furnish the same information to both groups.
But Pennzoil contends dissolving the industry committee would obstruct the oversight function the panel was created to help perform. James Shaddix, Pennzoil’s assistant general counsel and industry committee co-chairman, said Pennzoil already had registered its objections to Texaco’s proposal.
In addition, although Pennzoil could join the 24-member general creditors committee if the industry committee were dissolved, it would have a relatively smaller voice and would be somewhat of an outsider, joining a group that already had been in operation for months.
A source familiar with the request said the industry committee previously had voted that it should not be dissolved, but did not know whether the response would be different following the meeting with Jones.