Pennzoil Will Co-Chair Panel in Texaco Case : Tenneco Also Named to Group Advising Court
Pennzoil and Tenneco on Tuesday were named co-chairs of one of two creditor committees that will advise the bankruptcy court on the reorganization of Texaco.
The selection of the two Houston-based energy companies to jointly chair the committee of Texaco competitors assures Pennzoil--which Texaco blames for its plight--a major voice in the reorganization, while also giving other oil companies with much smaller claims and somewhat different concerns an equal role.
Pennzoil, which said it is “satisfied” with co-chairship, is by far Texaco’s largest unsecured creditor because of a $10.3-billion judgment against Texaco that it was awarded in late 1984 by a Houston jury. The legal battle, which is on appeal to the Texas Supreme Court, is over Texaco’s disputed purchase of Getty Oil and has been blamed by Texaco for the April 12 bankruptcy filing.
No Texaco Objection
Separately, the other creditors’ panel named Monday by bankruptcy trustee Harry Jones to help steer the Texaco case through bankruptcy proceedings named as its chairman Charles Luce, a director and special counsel to Texaco creditor Metropolitan Life Insurance.
Texaco, which had no power in selecting either the committees or the chairs but had sought to reduce Pennzoil’s role in the bankruptcy proceedings on grounds that Pennzoil would unfair gain access to Texaco secrets about the multibillion-dollar legal battle, said it has “no objection” to Pennzoil’s co-chairship of the competitors’ committee.
Its objections were stilled Monday when trustee Jones, in an unprecedented move, divorced Texaco’s oil-company creditors from its other creditors by forming two separate creditors committees. Pennzoil and six other oil companies are on one committee, and 19 other Texaco creditors, including banks, insurance companies, a union, non-oil businesses and the Getty Museum compose the other.
Texaco immediately indicated that any proprietary information it is forced to give the general creditors committee will be withheld from the competitors’ committee.
The trustee’s “provision for a separate industry committee should provide the protection necessary for Texaco’s competitive business operations to continue in the normal course,” a Texaco spokeswoman said.
Without such key information, it is unclear what powers the competitors’ committee will have.
David Berger, a Philadelphia lawyer representing 6,000 Texaco shareholders who has argued that Pennzoil should have no major role in the bankruptcy proceedings, said he is “not pleased by Pennzoil being any part of a chairmanship” and is considering a lawsuit.
