PENNZOIL<PZL> TO CONTEST TEXACO <QTX> BANKRUPTCY
Pennzoil Co lawyers said they plan to
file documents challenging Texaco Inc's Chapter 11 bankruptcy
proceedings in the Southern District of New York.
    John Jeffers, a Houston lawyer representing Pennzoil in its
10.53 billion dlr dispute with Texaco over the acquisition of
Getty Oil Co, said he expected the challenge to be filed
sometime this week.
    "We'll challenge it as a bad faith filing," Jeffers told
Reuters following a brief hearing before a Texas State Court of
Appeals.
    The court had been scheduled to hear arguments on a Texaco
motion to reduce the amount of bond required for it to appeal
the judgement.
    Instead, the court agreed with Texaco lawyers that the
issue was moot because of Texaco's bankruptcy petition filed
yesterday that stays all of its debts and obligations.
    "We think they abused the process," Jeffers said, referring
to Texaco's bankruptcy filing.
    D. J. Baker, a lawyer representing Texaco, told reporters
that the nation's third largest oil company was forced to seek
bankruptcy protection because of its precarious fianncial
condition and problems with suplliers and bankers stemming from
the 10.53 billion dlr judgement.
    "All activity after the filing can be conducted on normal
business terms," Baker said.
    He said Texaco would seek permission from the court to
continue its appeal in Texas courts of the Pennzoil judgement.
    "There will be no bond required because all state court
litigation has been stayed," Baker said.
    When asked whether Texaco's reorganization plan would
include major restructuring of the company, Baker declined to
say what the eventual plan might include.
    "I think Texaco will succesfully complete its Chapter 11
proceedings and have a reorganization plan approved by the
court," he said.
    Baker said Texaco expected Pennzoil to seek a seat on a
creditors' committee to be appointed by the bankruptcy courts
but added he did not know whether Texaco would oppose such an
attempt.
    Lawyers for both sides also said that each company
continued to be interested in a possible settlement, but
declined to say whether any negotiations were scheduled between
the two companies.
    "Texaco has tried to settle and will continue and try and
settle," Baker said.
    The two companies reportedly remain far apart in what each
considers to be a fair settlement, with Pennzoil seeking
between three and five billion dlrs, while Texaco has
maintained it cannot pay more than about one billion dlrs,
according to analysts.
 Reuter
