Word: texaco
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Dates: during 1980-1989
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...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 February a Texas appeals court reduced the penalty against Texaco -- but only to $8.5 billion. By that time the addition of 15 months' worth of interest and court costs to the $8.5 billion meant that Texaco still owed $10.2 billion. Under a court order, Texaco has been paying $2.5 million a day, $104,000 an hour, $1,736 a minute into an escrow account to cover interest on the judgment...
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...
...Texaco's DeCrane immediately called a press conference in White Plains to say that unless the company got new legal relief from having to post a $10 billion bond, it might be forced into bankruptcy proceedings. The company's legal team, led by David Boies of Manhattan-based Cravath, Swaine & Moore, obtained a temporary restraining order in Texas that barred Pennzoil from making any moves to seize Texaco's assets. Meanwhile, Kinnear called Pennzoil's Liedtke and asked for a face-to-face meeting in Houston. Liedtke agreed...
Kinnear knew that many of Texaco's creditors and suppliers were getting jumpy and that the Supreme Court decision might cause the whole situation to spiral out of control. In an affidavit filed in a Texas appeals court, Texaco outlined in detail the pressures it was under. Chase Manhattan had demanded that Texaco maintain new minimum balances in its accounts before the bank would transfer funds to satisfy commercial obligations. Worse, Manufacturers Hanover Trust had canceled a $750 million line of credit...