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Texaco Creditor Groups Ordered to Combine

November 13, 1987|DEBRA WHITEFIELD | Times Staff Writer

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.

Texaco said it was "very pleased" with the decision, which it had sought. And Stuart Hirshfield, a New York bankruptcy lawyer, called the ruling a "psychological victory" for the embattled oil giant.

Pennzoil, which had opposed the dissolution of the industry committee, said it would have no comment until the industry committee reviews the decision today.

Clearly displeased with the ruling, however, was the committee representing Texaco creditors outside the oil and gas industry.

"So much of what we do depends on the strategy between Pennzoil and Texaco, and (having Pennzoil on this committee) will make the job of our committee more difficult," said Jeffrey Hodgman, acting chairman of the general creditors' committee and a senior vice president at Metropolitan Life Insurance Co.

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