Newspaper article THE JOURNAL RECORD

SEC Files Objection to Texas International Reorganization Plan

Newspaper article THE JOURNAL RECORD

SEC Files Objection to Texas International Reorganization Plan

Article excerpt

An objection to Texas International Co.'s Chapter 11 bankruptcy plan for reorganization was filed Thursday by the U.S. Securities and Exchange Commission.

In its proceedings in the U.S. Bankruptcy Court for the Western District of Oklahoma, the SEC requested a court order to disallow Texas International from releasing non-debtor third parties, possibly liable jointly for securities fraud violations.

The Oklahoma City oil and gas company filed for Chapter 11 reorganization on April 26, 1988. Its assets totaled $223.4 million, consisted primarily of the stock of operating subsidiaries which are not in bankruptcies, the petition noted. Liabilities totaled $2.5 million.

Texas Internationl reported assets of $37.2 million and liabilities of $165,227 as of Dec. 31, 1988, when the SEC began participating in the case, Thursday's filing indicated.

The central question for the SEC, according to the filing, is whether a debtor should be permitted to use its reorganization plan as a vehicle to obtain a discharge of non-debtor's liability for securities law violations.

The commission filing argued release of non-debtor third parties would directly affect the ability of public investors to pursue remedies against third parties that may be liable for violations of the federal securities law.

Further, the SEC said the discharge provisions exceed the limitations of Section 524 (e) of the U.S. Bankruptcy Code, which states that only debts of the debtor are affected by the Chapter 11 discharge.

Texas International also listed approximately 80 million shares of common stock outstanding in a commission report filed on Dec. 31. The stock is held by approximately 16,000 holders. …

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