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Bankruptcy Might Be Option for BP
Published on 07/12/2010
Although experts say unlikely, BP may be forced to file for bankruptcy if the number of liability lawsuits continue to rise.
BP has $260 billion in assets but may still be at risk because of tort and environmental liability resulting from the Deepwater Horizon disaster. A new cap is currently being placed on the broken well, which began spewing up to 100,000 barrels of oil a day into the Gulf of Mexico on April 20th.
The liability lawsuits could reach astronomical levels if currents bring the oil to East Coast shorelines, Cuba, or other Caribbean nations. Even though this circumstance may be unlikely, BP must still be considering this possibility and the repercussions that could result.
A memorandum from the Congressional Research Service has outlined the ways that a BP bankruptcy could affect liability compensation and cleanup efforts. Because the liabilities may be categorized as unsecured claims and liabilities left behind after the sale of assets, the memo concludes that the federal government would likely have to foot the cleanup bill in the event of bankruptcy.
The Justice Department has also mandated that BP give 30 day notice if they plan any substantial transfers of cash, which may precede a bankruptcy filing. The House has already passed a bill which attempts to limit BPs options in the case of bankruptcy.
