Could BP go bankrupt?

[Cry Havoc]

http://www.treehugger.com/files/2010/06/bp-bankrupt-gulf-spill.php

So far in its coverage of the BP Gulf spill, the media has made much of the fact that the company's daily profits are higher than its daily cleanup costs, and that after raking in $17 billion in profits last year alone, such costs are but a drop in the bucket. But that's changing fast -- and if a few other factors come to pass, it's possible that the Gulf spill will end up bankrupting the oil giant. Speculators are calling this possible outcome the "Texaco scenario." Here's how it would work.

WATCH SLIDESHOW: Amazing, Devastating Photography of the Gulf Oil Spill

Andrew Ross Sorkin details the possibility in his New York Times Dealbook column:

BP's costs for the cleanup could run as high as $23 billion, according to Credit Suisse. On top of that, BP could face an additional $14 billion in claims from gulf fisherman and the tourism industry. So while conservative estimates put the bill at $15 billion, something approaching $40 billion is not out of the question. After all, little about this spill has turned out as expected.

The company has about $12 billion in cash and short-term investments, but there is already a debate about whether it should cut its dividend out of fear that it could run out of money ... But all those numbers don't account for the greatest possible threat: a jury verdict against BP. Such a verdict might push the cost of the spill into the hundreds of billions. If that happened, even BP might buckle.

And such a verdict is far from unlikely -- as you're likely aware, the US Justice Department has already opened a criminal investigation into BP's actions leading up to the spill. Analysts are calling this outcome the 'Texaco scenario' after the case in 1987 where that oil company lost a $1 billion lawsuit and had to file Chapter 11 after being unable to raise the cash. Sorkin continues with this what-if scenario:

Imagine the BP case playing out in a Louisiana courtroom, against the backdrop of an oil-choked local economy, high unemployment and an angry public. How high can you count?

Under the Oil Pollution Act of 1990, BP's liability for economic devastation -- above the cost of the cleanup -- is capped at $75 million, a number Mr. Hayward has already said he plans to blow through. But if BP is found to have violated safety regulations, which seems likely, that cap becomes irrelevant.

In which case, BP could feasibly go bankrupt. And then the poor, overworked BP CEO would finally get his life back -- just probably not in the manner in which he hoped.

And even if the company doesn't go bankrupt, it will still likely be a major acquisition target for other larger oil companies like Shell and Exxon, who are reportedly already eying the falling company.

---

:pctoss

Great. As much as I hate BP (and have for long before this disaster), the last thing we need is big oil becoming bigger oil.

[Wild Cobra]

I would restate the title question. As it stands, it would be advantageous for them to use the bankruptcy laws not to pay damages. The question is, weather they will use that unethical route or not. They have plenty of money and assets to borrow against in a known profitable field to stay out of bankruptcy.

[sook]

i agree with WC

[Cry Havoc]

I would restate the title question. As it stands, it would be advantageous for them to use the bankruptcy laws not to pay damages. The question is, weather they will use that unethical route or not. They have plenty of money and assets to borrow against in a known profitable field to stay out of bankruptcy.

That depends. There stands a good chance that the Fed could force BP to make payments on this. If that's the case, they may be forced into bankruptcy.

I don't think they're getting out of this. They've got too much bad press already. It's exploded, both literally and figuratively, right in their faces.

[George Gervin's Afro]

I would restate the title question. As it stands, it would be advantageous for them to use the bankruptcy laws not to pay damages. The question is, weather they will use that unethical route or not. They have plenty of money and assets to borrow against in a known profitable field to stay out of bankruptcy.

since when have ethics mattered to the free martkets at all cost crowd?

[TDMVPDPOY]

lol declare bankruptcy, force obama to open feds wallets to fix this mess which bp is responsible....election yr anyone?

[ElNono]

lol ethics

[LnGrrrR]

Here's my question... wtf is up with the BP CEO? Has he not attended a single crisis management class? He's like a walking example of everything NOT to do and say during a crisis.

[Ignignokt]

One question for OP.

Are you a fag?

If so, chug a cock.

[LnGrrrR]

One question for OP.

Are you a fag?

If so, chug a cock.

Ig, why are you here? I mean, if you want to be a troglodyte, feel free. But you could do that by living under a bridge, throwing stones at children and eating small animals. That way we could be spared your ignorance.

[Ignignokt]

Ig, why are you here? I mean, if you want to be a troglodyte, feel free. But you could do that by living under a bridge, throwing stones at children and eating small animals. That way we could be spared your ignorance.

:p:

[Wild Cobra]

since when have ethics mattered to the free martkets at all cost crowd?
That's as bigoted as implying all blacks are thugs.

Do you stand by that bigoted remark?

[Wild Cobra]

Here's my question... wtf is up with the BP CEO? Has he not attended a single crisis management class? He's like a walking example of everything NOT to do and say during a crisis.
You lost me there.

Just what do you expect him to do?

[LnGrrrR]

You lost me there.

Just what do you expect him to do?

You apologize, say you're doing everything you can to fix it, and you DON'T deviate from that line.

Here are just some of the things that the CEO has said:

http://www.nowpublic.com/environment/tony-hayward-quotes-bp-ceo-gaffes-or-remarks-wents-wrong-2624196.html



I think the environmental impact of this disaster is likely to have been very, very modest."


You should probably wait until the spill is, you know, stopped, before you assess the impact. Otherwise you look like a horse's ass.



"We're sorry for the massive disruption it's caused to their lives," Hayward said."There's no one who wants this thing over more than I do, I'd like my life back


How callous does this sound? You never complain about how your company's mistake is messing up your life. Did he even think to stop before he spoke, to picture how it would sound? He's since apologized, but damage done.

http://www.newsweek.com/2010/06/02/what-not-to-say-when-your-company-is-ruining-the-world-.html



On April 29, The New York Times reported (http://www.nytimes.com/2010/04/30/business/30bp.html?hp) that Hayward, apparently exasperated, turned to fellow executives in his London office and asked, “What the hell did we do to deserve this?"


I mean, how many gaffes should one CEO have in a crisis?

[Ignignokt]

You apologize, say you're doing everything you can to fix it, and you DON'T deviate from that line.

Here are just some of the things that the CEO has said:

http://www.nowpublic.com/environment/tony-hayward-quotes-bp-ceo-gaffes-or-remarks-wents-wrong-2624196.html



You should probably wait until the spill is, you know, stopped, before you assess the impact. Otherwise you look like a horse's ass.



How callous does this sound? You never complain about how your company's mistake is messing up your life. Did he even think to stop before he spoke, to picture how it would sound? He's since apologized, but damage done.

http://www.newsweek.com/2010/06/02/what-not-to-say-when-your-company-is-ruining-the-world-.html



I mean, how many gaffes should one CEO have in a crisis?


cool story bro

[Wild Cobra]

You apologize, say you're doing everything you can to fix it, and you DON'T deviate from that line.

Here are just some of the things that the CEO has said:

http://www.nowpublic.com/environment/tony-hayward-quotes-bp-ceo-gaffes-or-remarks-wents-wrong-2624196.html

Too bad you aren't as critical of liberals.

[Cry Havoc]

One question for OP.

Are you a fag?

If so, chug a cock.

:lol It's shameless the way you flirt with me.

[LnGrrrR]

Too bad you aren't as critical of liberals.

Do you have an actual rebuttal or just another strawman?

[xrayzebra]

Could BP go bankrupt?

Well Obama certainly hopes so. Unless they promise to turn everything
over to the unions. SEIU more than likely would love to run BP.

Obama is not to popular in England right now. Seems his ability to
control people is failing. But that is what happens when you send a
community organizer out to do a man's job.

:lol:toast

[Stringer_Bell]

That's as bigoted as implying all blacks are thugs.

Do you stand by that bigoted remark?

Oh dear god, man!! Calling all black people thugs is totally different than calling all capitalists unethical.

The term "free markets at all costs" = a sure way to cross ethical guidelines. It's not even close to attributing a person's skin color (an obvious physical attribute) with the tendency to be thuggish.

BP is one of the top 5 most profitable oil companies, right? And prolly one of the most profitable in the world. They could pay for the spill and local economic losses easily...I can't imagine why/how they'd be allowed to file bankrupcy. Sounds like a twisted fucking joke.

[Winehole23]

We ran out of money.

[Stringer_Bell]

^ C'mon, who is saying that shit? And who is buying it? DAMMIT DAMMIT DAMMIT! >.<

[Wild Cobra]

Oh dear god, man!! Calling all black people thugs is totally different than calling all capitalists unethical.

Bullshit you bigoted ass.

[Stringer_Bell]

Bullshit you bigoted ass.

:wow

Can someone clarify for me, since I don't know anything about bank laws, that all BP has to do is say it has no money to be titled as "bankrupt"?

[Winehole23]

Presumably, a judge will verify the bona fides of the pleadings and enforce fairness to BP's creditors, if BP really stands to go bankrupt.

The likeliest scenario in my mind would be the lost lawsuit or the gigantic fine. That's one to ten years off, IMO.

[Cry Havoc]

Presumably, a judge will verify the bona fides of the pleadings and enforce fairness to BP's creditors, if BP really stands to go bankrupt.

The likeliest scenario in my mind would be the lost lawsuit or the gigantic fine. That's one to ten years off, IMO.

Depends on how long it takes them to get this situation under control.

The longer this lasts, and the more bad press it generates for them, the more devastating it is for the company financially (obviously). Their stock is in near free-fall right now, and they're going to have to spend billions easily to even begin to get this situation under control.

[Ignignokt]

depends on how long it takes them to get this situation under control.

The longer this lasts, and the more bad press it generates for them, the more devastating it is for the company financially (obviously). Their stock is in near free-fall right now, and they're going to have to spend billions easily to even begin to get this situation under control.

pro gress

[Winehole23]

Depends on how long it takes them to get this situation under control.

The longer this lasts, and the more bad press it generates for them, the more devastating it is for the company financially (obviously). Their stock is in near free-fall right now, and they're going to have to spend billions easily to even begin to get this situation under control.We might be due for another war to distract us from all the jackpots we already got into, including this one.

[vy65]

There are special proceedings under the bankruptcy code for individuals who suffer asbestosis an other related conditions to force a manufacturer into bankruptcy - and - to become a preferred creditor. It's like a hostile takeover of sorts, where the company becomes owned by the very people it harmed, and therefore pays out compensation to the victims via ownership.

The provisions are limited to asbestos companies, although a similar solution here would probably work out well.

[Winehole23]

The provisions are limited to asbestos companies, although a similar solution here would probably be strangled in its crib.Fify.

[TheProfessor]

La. official frets over BP bankruptcy (http://dyn.politico.com/printstory.cfm?uuid=285A0A77-18FE-70B2-A8D9D9C97BADCEFA)

The state treasurer of Louisiana is going public with concerns over whether BP can actually afford to pay tens of billions in claims stemming from the Gulf oil spill – saying he believes the company only has $12 billion in readily accessible assets.

Treasurer John Kennedy, a Republican, thinks federal and state officials are too dependent on the oil giant to foot the bill for the clean-up and the growing economic devastation in the Gulf.

Theoretically, BP could dodge billions in payouts to Gulf area businesses, residents, along with state and federal agencies, if the company sought Chapter 11 bankruptcy – leaving the government holding the bag, Kennedy claims.

“I am concerned about the solvency of BP,” Kennedy wrote to Louisiana Gov. Bobby Jindal Thursday. “More specifically I am concerned about the possibility BP will seek the protection of United States Bankruptcy protection."

Kennedy added: “I believe it is imperative that the state of Louisiana begin to develop a plan to deal with the economic effect of this catastrophe in the event of a BP bankruptcy. We all hope that does not happen and such a plan is not needed, but we must be ready."

He says Texaco used a similar tactic in 1987, when it sought bankruptcy protection to shield itself from a $1 billion jury verdict.

BP currently has a net worth of about $81 billion but most of those assets are locked up in illiquid assets. Analysts at Credit Suisse have estimated the total clean-up cost at $23 million – but that doesn’t factor in billions in claims resulting from lost tourism in Alabama, Florida, Louisiana, Mississippi and Texas.

Since the Deepwater Horizon drilling platform sunk on April 20 BP’s stock has plummeted – and the cost of insuring its debt against default has rocketed by about 50 percent.

BP officials say they will pay off any legitimate claim and have refused to entertain the possibility of bankruptcy, restructuring or spinning off their U.S. operations – despite widespread speculation about the company’s future in the financial press.

The White House didn’t immediately respond to requests for comment, but Press Secretary Robert Gibbs dismissed the notion that BP couldn’t fulfill its financial obligations.

Jindal’s office says the governor, who has criticized the response to the spill by BP and the Coast Guard, has directed Louisiana’s attorney general to study the matter. In the past, Jindal has said it’s unlikely BP could elude liability, no matter what it does.

A BP spokesman didn’t immediately return a call for comment.

[Cant_Be_Faded]

I don't think so. It's simply to insanely big of a company, and the British government relies on it.

Obama would put the US at a huge strategic and political risk by pissing off the British if he unilaterally goes awol against BP.

[Yonivore]

I don't think so. It's simply to insanely big of a company, and the British government relies on it.

Obama would put the US at a huge strategic and political risk by pissing off the British if he unilaterally goes awol against BP.
Yeah, because he's been so accommodating to the British so far...

[Cant_Be_Faded]

Yeah, because he's been so accommodating to the British so far...

Elucidate

[boutons_deux]

UK govt and UK pension funds are complaining the Magic Negro's trash talk about BP is "political".

BP going bankrupt would wipe $Bs in UK pension funds, which have already taken a hit from the huge drop in BP stock price.

[Cant_Be_Faded]

UK govt and UK pension funds are complaining the Magic Negro's trash talk about BP is "political".

BP going bankrupt would wipe $Bs in UK pension funds, which have already taken a hit from the huge drop in BP stock price.

Which kinda ties in to what I'm trying to get out of Yoni to explain.


Obama so far has done.......talking. I seriously doubt he follows through with any of the extreme measures he's TALKED about. US and UK are like vice grip, remember? But if Obama did do something that stupid, then it makes him the feeble total fuckup president in terms of foreign policy (and this issue is a foreign policy issue as well) that his worst critics have been saying he is. It would be a total game changer.

I don't think he does it. But I suppose anything is possible.

[Yonivore]

Elucidate
Well, it all started with Obama giving back a Churchill bust, giving the Queen an iPod chocked full of Obama awesomeness, Michelle taking a spin through the White House gift shop to pick up a last minute, no thought, gift for the Prime Minister's children and Obama giving him a DVD set that he couldn't even use back home...and, then, it deteriorated from there:

Barack Obama 'too tired' to give proper welcome to Gordon Brown (http://www.telegraph.co.uk/news/worldnews/northamerica/usa/barackobama/4953523/Barack-Obama-too-tired-to-give-proper-welcome-to-Gordon-Brown.html)


The real views of many in Obama administration were laid bare by a State Department official involved in planning the Brown visit, who reacted with fury when questioned by The Sunday Telegraph about why the event was so low-key.

The official dismissed any notion of the special relationship, saying: "There's nothing special about Britain. You're just the same as the other 190 countries in the world. You shouldn't expect special treatment." The apparent lack of attention to detail by the Obama administration is indicative of what many believe to be Mr Obama's determination to do too much too quickly.
That's smart diplomacy....

He's gone on to hug and bow to just about every tin-horn and not-so-tin-horn dictator in the world and, now, seems poised to sell-out the Israelis.

I'd hate to be a an American ally right now.

[Yonivore]

Which kinda ties in to what I'm trying to get out of Yoni to explain.


Obama so far has done.......talking. I seriously doubt he follows through with any of the extreme measures he's TALKED about. US and UK are like vice grip, remember? But if Obama did do something that stupid, then it makes him the feeble total fuckup president in terms of foreign policy (and this issue is a foreign policy issue as well) that his worst critics have been saying he is. It would be a total game changer.

I don't think he does it. But I suppose anything is possible.
Guess what folks, there's a buttload of American "pensioners" invested in BP, as well.

As far as following through...BP has already announced one concession...

BP plans to defer dividend after pressure from Obama (http://www.timesonline.co.uk/tol/news/world/us_and_americas/article7148202.ece)

And, as for that moratorium on drilling, it affects about 5% of Gulf wells and not even that many of the deep-water sites. But, it will put thousands of Americans out of work.

Oh, and Obama's Interior Secretary revealed, in testimony today, it wasn't the idea of the scientists they consulted to impose a moratorium, it was his and Barry's -- because, well, they're so much smarter than everyone else.

I blame that reactionary idiocy, I alluded to in another thread.

[Cant_Be_Faded]

Well, it all started with Obama giving back a Churchill bust, giving the Queen an iPod chocked full of Obama awesomeness, Michelle taking a spin through the White House gift shop to pick up a last minute, no thought, gift for the Prime Minister's children and Obama giving him a DVD set that he couldn't even use back home...and, then, it deteriorated from there:

Barack Obama 'too tired' to give proper welcome to Gordon Brown (http://www.telegraph.co.uk/news/worldnews/northamerica/usa/barackobama/4953523/Barack-Obama-too-tired-to-give-proper-welcome-to-Gordon-Brown.html)


That's smart diplomacy....

He's gone on to hug and bow to just about every tin-horn and not-so-tin-horn dictator in the world and, now, seems poised to sell-out the Israelis.

I'd hate to be a an American ally right now.

Yoni, underneath your pedictable bull shit spewing exterior, you do make some points every once in a while. I will ignore the feces contaminating your main point, and respond only to that.

Dude, you can't confuse propriety and dim-witted faux paus with what matters beyond all else: The money. Dolla, dollah bill, yo.


Obama taking BP by the horns (for domestic support at the polls) would be a total disaster, game changing, fuck up of the century. Not about if he'd be right, or wrong, or if it would work, or not. It has the potential to fuck over the UK government and upset a shitload of their citizens. You'd be fucking with alot of UK money. It would alienate our ally more than anything we've ever done.

I don't even think officials within the US government itself would allow Obama to do something that fucking stupid.

Obama taking down BP would be an entirely entirely different stratosphere, a different universe than all of the comparably ticky tack, snow-coning issues you just mentioned.