NEW YORK — A federal bankruptcy judge on Thursday ordered the two committees representing Texaco creditors to merge, handing Texaco a strategic victory in its $10-billion battle with Pennzoil.
Judge Howard Schwartzberg ruled in White Plains, N.Y., that the committee of oil industry creditors co-chaired by Pennzoil must be absorbed by the general creditors' committee because the novel arrangement has proven too expensive and is no longer appropriate. Texaco says it will save $7 million a year once the committees are merged.
Texaco filed for bankruptcy law protection from its creditors on April 12 to forestall enforcement of a $10.3-billion judgment that Texaco improperly interfered with Pennzoil's acquisition of Getty Oil. Because Texaco's largest creditor is also its archrival, U.S. Trustee Harry Jones took the unusual step of appointing two creditors' committees so Texaco could keep from its competitors certain financial documents needed by some creditors.
But in a 19-page ruling reversing Jones' decision last month to keep the two committees, Schwartzberg said Texaco has wound up giving both committees identical financial information, so the arrangement has only resulted in double the legal, banking and accounting fees.