The Chapter 11 filing by BP North America, a fully owned subsidiary of BP, plc, would protect the company from any creditors including the US Government and all business owners who are seeking restitution for damages done to their livelihood.
The shareholders fear that a restructuring plan will leave them behind since they have no say in any decision making during the court proceedings. Only the current bondholders will be able to decide how the new company will ultimately emerge.
A bankruptcy filing by BP North America has long been denied by senior management, but an internal source close to the negotiations confirmed two days ago, on the condition of anonymity, that plans are in the making to seek such protection.
That would be a devastating blow to all shrimpers, fishermen, crabbers and the entire tourism industry along the Gulf coast since their claims will not be heard in court during the bankruptcy protection period.
A Chapter 11 filing may take several months before a restructuring agreement is reached and approved by a US court. It also means that several claimants may never see any sort of compensation for the damage done and the US Government may very well end up paying the entire bill.
Another and better solution may be to nationalize BP North America and seize their assets while there is still time to do so. That would give the government total control over the balance sheet and the possibility to divest assets to pay for the cleanup and the compensation to small business owners.
The oil spill is getting bigger every day and the Gulf Stream is carrying it in its wake and on its way to Key West where it will find an easy way into the Atlantic Ocean and along our South Eastern seaboard.
Miami Beach will be the first to welcome the long oil slick in the next 15 days as it moves further up north to Cape Hatteras, North Carolina.
Written by Nick Doms© 2010, all rights reserved