Bankruptcy Judge: Texaco Fight Can Resume in Texas
``You may proceed in the appellate courts in Texas with my blessings,'' said Judge Howard Schwartzberg, who is overseeing Texaco's reorganization under the federal bankruptcy laws.
During a brief and cordial court session, Schwartzberg also approved a plan for Texaco to make payments on more than 9,400 oil and gas leases.
All litigation between Texaco, based in White Plains, N.Y., and Houston-based Pennzoil was put on hold April 12 when Texaco filed for Chapter 11 of the U.S. Bankruptcy Code.
Under Chapter 11, a company continues operating while it works out a plan to reorganize its finances. But the company's pre-Chapter 11 debts are frozen during reorganization and the company is protected from lawsuits by its creditors, unless other arrangements are approved by the bankruptcy judge.
The celebrated Texaco-Pennzoil battle arose from Texaco's takeover of Getty Oil Co. in 1984, a deal Pennzoil alleged illegally interfered with its plans to merge with Getty.
A Texas jury awarded Pennzoil $10.5 billion in damages. A higher court later reduced the award to $8.5 billion, but interest and penalties had increased the amount to about $11 billion by the time Texaco filed for protection. …