Shareholders Back Texaco Reorganization / Bankruptcy Case Nears End

Article excerpt

WHITE PLAINS, N.Y. - Dissident stockholders dropped their opposition to Texaco Inc.'s financial reorganization plan Tuesday as a federal judge opened a hearing on whether to implement the proposal.

Texaco, the nation's third largest oil company, announced that the plan was overwhelmingly supported in a vote by shareholders. It said 96 percent of the shares voted - 174 million out of 181 million - backed the plan, which would allow the company to emerge from bankruptcy court protection.

After receiving the vote results, U.S. Bankruptcy Court Judge Howard Schwartzberg heard comments on the plan from various parties, none of which offered any opposition to the proposal.

Later, he recessed the hearing until this morning.

Even though the plan received more than the two-thirds vote needed from shareholders, Schwartzberg was not bound by the results. The final decision on whether the plan was fair and equitable rested with the judge.

If Schwartzberg confirmed the plan after the hearing, Texaco could emerge from bankruptcy protection by mid-April, which would be a year after it sought protection from creditors under Chapter 11 of the federal bankruptcy code.

Texaco was the biggest company ever to seek refuge in the bankruptcy courts.

Shortly before the hearing began, Harvey Miller, the bankruptcy lawyer representing Texaco, announced that attorneys for dissident shareholders had dropped their opposition to the reorganization plan.

Those stockholders had objected to provisions that would free officers and advisers of Texaco, Pennzoil Co., the former Getty Oil Co., the Sarah Getty Trust and the J. Paul Getty Museum from all liability arising out of the court fight that resulted from a Texaco-Pennzoil battle over Getty Oil. …