Word: bonding
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Texaco left itself an escape hatch. Officials said that if a settlement was reached soon or a large reduction of the bond granted, then the company could withdraw or suspend the bankruptcy filing. In other words, Texaco could be using its bankruptcy as the ultimate pressure tactic against Pennzoil. Liedtke flew to New York City on Sunday...
Never have the stakes in a corporate battle been higher. After losing a crucial decision in the U.S. Supreme Court last week, Texaco faced the disastrous prospect of having to post a $10 billion bond in its epic legal fight with Pennzoil. As its stock plummeted and its credit began to dry up, the company was thrown into a financial crisis. Over the weekend, Texaco's board of directors gathered for an emergency meeting at the firm's White Plains, N.Y., headquarters. Following a marathon discussion, the directors chose a stunning course: the eighth largest U.S. industrial corporation (1986 sales...
...industrial corporation (1986 sales: $1.78 billion) and the 20th biggest oil company, would be allowed to topple a titan about 18 times its size. But Texaco soon learned that it was dangerously vulnerable to an unusual provision of Texas law. In this case, it required Texaco to post a bond for roughly the full amount of the judgment while the company pursued appeals...
...avoid an immediate crisis, Texaco's lawyers quickly sought relief in a federal court in White Plains, N.Y. The judge ruled in January 1986 that Texaco's bond must be reduced to a more reasonable $1 billion. That gave the company some breathing space to file appeals, and the scene of battle returned to Houston, where much of the public was rooting for the hometown company against New York-based Texaco. Pennzoil Attorney Joseph Jamail was already becoming a folk hero there for jousting with the giant firm...
Last week's drama started unfolding early Monday in Washington, where the Supreme Court ruled 9 to 0 that the federal judge had acted improperly in reducing the size of Texaco's bond. The Justices said that the amount of the bond was a matter for the Texas courts to decide. For Texaco, a stable situation had suddenly become a crisis...