Talks With Texaco Dragging, Pennzoil Claims
Pennzoil, opposing Texaco’s request to extend the filing period for its bankruptcy reorganization plan, claims there have been no “meaningful” talks to settle their $10.3-billion legal dispute, court papers revealed Friday.
Pennzoil, which is Texaco’s largest unsecured creditor, said it has prepared its own reorganization plan in an effort to speed up Texaco bankruptcy proceedings and to let Texaco shareholders decide the terms of the settlement.
Texaco filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code on April 12 after failing to reach what it called a “reasonable” settlement of its legal battle with Pennzoil over the ownership of Getty Oil Co.
Texaco has said the move was necessary to safeguard its assets while appealing a record $10.3-billion judgment won by Pennzoil in a lawsuit challenging Texaco’s 1984 acquisition of Getty.
Under the 1985 judgment, a jury ruled that Texaco had illegally enticed Getty out of a previous merger deal with Pennzoil.
In court papers, Pennzoil indicated that it agreed with Texaco that resolution of their legal quarrel over Getty was central to the bankruptcy case and Texaco’s reorganization.
“Despite this fact, it is the view of Pennzoil that there have been no meaningful discussions with Texaco for purposes of resolving the Pennzoil-Texaco dispute,” Pennzoil said.
Pennzoil said it “has been ready, willing and able” to propose a “substantial compromise” on the $10.3-billion judgment.
Pennzoil Chairman Hugh Liedtke rejected Texaco’s final offer of $2 billion a day before Texaco sought bankruptcy protection. Liedtke was holding out for $4 billion to $5 billion.
Pennzoil’s papers said it already has drafted its own plan of reorganization for Texaco “which leaves all classes of creditors other than Pennzoil unimpaired.”
“The purpose of the plan is to bring the bankruptcy to a prompt conclusion and to allow Texaco’s shareholders--not Texaco’s management--to decide the terms upon which the Pennzoil-Texaco dispute should be settled,” Pennzoil said.
The move by Pennzoil came after Texaco sought the extension for filing its reorganization plan, citing the complex bankruptcy and pending appeal in Texas of the $10.3-billion damage award.
Also looming over the proceedings is the growing stake in Texaco held by Australian investor Robert Holmes a Court and speculation over what role he might play in ending the Texaco-Pennzoil feud over Getty.
Judge Howard Schwartzberg of the U.S. Bankruptcy Court for the Southern District of New York is scheduled to hear both the Texaco and Pennzoil motions Thursday.
