Bankruptcy Judge Thrust Into Limelight With Texaco Filing

Howard Schwartzberg has spent most of his 16 years as a federal bankruptcy judge in quiet White Plains, N.Y., overseeing the reorganization of small firms and arranging matters, he says, “so nice suburban couples could hang on to their homes.”

But Schwartzberg knew he was in for a change of pace Sunday morning when four attorneys for Texaco showed up beside the backyard deck of his Larchmont, N.Y., residence, where he was reading the newspaper. They handed him a foot-high stack of papers that represented the initial filings in the largest bankruptcy case ever.

The reorganization of Texaco, the nation’s eighth-largest industrial company, “will certainly be something different,” said Schwartzberg, 57.

Schwartzberg is the only federal bankruptcy judge sitting in White Plains, where Texaco has its headquarters. So the case fell to him, though most of the New York area’s big bankruptcies have been fought out in the bustling chambers of federal court in Manhattan.

It was Judge Burton Lifland of federal bankruptcy court in Manhattan, for example, who took on the mammoth Manville case when the Denver manufacturer said it could not survive a mounting number of asbestos-related health injury claims.

Judge Schwartzberg acknowledges that his staff is a little overwhelmed by the task ahead--and the work that has begun piling up. Already, demands for extra copies of documents are straining the office’s aging copy machine, and the two phone lines were busy all day Monday.

“The staff is numb,” said Schwartzberg, who received undergraduate and law degrees from New York University. “We’ve gotten permission to add three temporaries, and we may need more. We may need more phone lines, too.”

Texaco attorneys formally turned the case over to Schwartzberg after shadowing him all day Saturday to make sure they could reach him with the papers before a court hearing that was scheduled for Monday in Houston. When Schwartzberg and his wife and another couple sat down for dinner at a French restaurant in White Plains on Saturday night, a Texaco lawyer stuck his head in to make sure of the judge’s whereabouts.

The Texaco shadow appeared again when the two couples got to dessert.

The judge, who lives next to the 11th hole of a golf course, said he told the Texaco lawyers Sunday morning that they ought to resolve the dispute right there--by having Bob Hope, an advertising spokesman for Texaco, shoot against sometime Pennzoil spokesman Arnold Palmer. “They didn’t laugh,” Schwartzberg said.

Schwartzberg is the longest-serving bankruptcy judge in the Southern District of New York, which includes the courts of New York City and jurisdictions as far north as Poughkeepsie. Perhaps most widely known of his cases was the 1977 bankruptcy of the Westchester Premier Theater of Tarrytown, N.Y.

Schwartzberg’s questions about missing ticket proceeds led to an FBI investigation that found that “skimming” had driven the live performance theater to bankruptcy. Prosecutors pursued a series of related cases for five years, convicting several organized crime figures as well as two senior executives of Warner Communications.

In 1985, Schwartzberg handled the bankruptcy of Teleram Communications Corp., which manufactured one of the first portable computers but was overtaken by competition from IBM Corp. and Tandy Corp.

New York bankruptcy attorneys who know Schwartzberg predict that, despite his jokes about the golf match, Schwartzberg will be a quiet and low-key presence rather than a colorful one. “He’ll be a calming presence,” attorney Martin Klein said. “He doesn’t generally do things to get himself in the limelight.”

Others added that he can be unpredictable as well. “The bankruptcy code skews everything in favor of the debtor, but Schwartzberg is not as knee-jerk as some in that direction,” said another New York attorney.

Schwartzberg, who has three grown children, says he hopes the case will not continue for the three years that some bankruptcy experts are predicting.

“I know it’s supposed to be historic, but I’m hoping that doesn’t mean never-ending,” he says.