Word: chapter
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Dates: during 1980-1989
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...required to put up a bond for some $10 billion while continuing to appeal the 1985 Texas judgment. Protecting itself from such an appeals decision had been a vital factor in Texaco's decision to flee into bankruptcy. The Houston hearing was stayed after Texaco lawyers argued that the Chapter 11 filing triggered an automatic halt to other legal proceedings. Pennzoil officials said they might challenge the bankruptcy petition, but at week's end they had not done...
Texaco's future financial position may be even better. Only Texaco's principal holding company and two financial subsidiaries are huddling within Chapter 11. Dozens of operating subsidiaries around the world are carrying on business as usual. They will help keep Texaco's annual cash flow close to $3.6 billion and its anticipated profit this year higher than $650 million -- all outside Pennzoil's direct grasp. That wrinkle took Chairman Liedtke by surprise. As he told TIME, "I thought that when we were suing Texaco, we were suing all of Texaco." Liedtke has claimed that Texaco illegally transferred assets, including...
Ultimately, though, Texaco may pay a heavier price for its bold gambit. For one thing, all of Texaco's regular creditors have been bludgeoned by the Chapter 11 device; their goodwill is important to the oil firm's longer-range survival. Among others, Texaco owes Chase Manhattan Bank $2.95 billion and Manhattan's Bankers Trust and Manufacturer's Hanover Trust an additional $1.5 billion. Outwardly, many of Texaco's creditors and lenders are serene about the situation. But at one major Manhattan bank with several hundred million dollars' worth of Texaco corporate notes on deposit, a senior executive admits...
...constrained are unhappy. Harold Ofstie, for example, is portfolio manager of Philadelphia-based Delaware Management, which owns 3.7 million Texaco shares. The bankruptcy filing means a projected loss of $11.1 million in annual dividend income for Delaware. Says Ofstie: "We understand the reasons why Texaco went into Chapter 11. But we're an income-oriented investment company, and Texaco doesn't have a yield anymore. That's a problem we can't ignore." As time passes, Wall Street analysts expect that big investors will steadily dump millions of Texaco shares onto the market...
...Under Chapter 11, Texaco's top management will operate much as it usually does. One of the attractions of the relaxed 1978 bankruptcy laws is that day- to-day management of an affected firm remains in the hands of its executives rather than those of a court-appointed trustee. Bankruptcy judges like Texaco's Schwartzberg oversee broader matters, such as the sale and acquisition of major assets, in consultation with committees of creditors...