# Could BP Just Declare Bankruptcy & Walk Away? **URL:** \ **Category:** Factual Questions\ **Created:** [June 4, 2010, 10:16pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988 "2010-06-04T22:16:19Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [June 5, 2010, 12:37pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/21 "2010-06-05T12:37:00Z")
Certainly the harm to their brand name will hurt them though. And it is a shame. Clearly they share part of the blame for this disaster but in other ways they have been among the more responsible oil companies, heavily investing in alternative energy R&D, as opposed to Exxon’s thumbing their noses at the whole concept. I doubt Exxon, or any other Big Oil, has been any more cautious in their deep water drilling safety fail-safes than BP; BP just had the disaster hit them first. The problem lay in the nature of the regulation and the mismanagement of risk assessments rampant through the industry, not in BP per se. IMHO. So long as we need as much oil as we apparently need, we will drill for oil where it is, which right now is deep waters. Sooner or later another event like this will happen again. We need to regulate better to be sure, but we also need to decrease the demand. Not to punish BP, or the industry, but to decrease the “need” to drill where they must drill. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [June 5, 2010, 6:49pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/22 "2010-06-05T18:49:55Z")
> [@DSeid](#): > > I doubt Exxon, or any other Big Oil, has been any more cautious in their deep water drilling safety fail-safes than BP; BP just had the disaster hit them first. I know this doesn’t parse out deep sea drilling versus everything else, but [According to OSHA](http://chartporn.org/2010/06/02/bps-safety-record/) in the past 3 years BP has had 760 willful safety violations to Exxon’s… 1 ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [June 5, 2010, 6:57pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/23 "2010-06-05T18:57:44Z")
> [@Shmendrik](#): > > Myself being a “regular guy”, I think this is a massive exaggeration. BP’s assets are worth hundreds of billions of dollars. By comparison, Exxon was originally fined $287 million for actual damages and $5 billion for punitive damages for the Exxon Valdez oil spill. As far as I can tell they, the punitive damages are still being disputed in court. > > In short, there is no way in hell BP is going to declare bankruptcy. They also have the money to get a staff of lawyers who will fight for decades. The 5 Bill in Exxon was cut in half in court and then later cut to 500 million . They made more money than that is just investing it for 20 years. The Alaskans that were left got an average of 15 thou. It is our system. Big advantage to the rich and powerful. ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [June 5, 2010, 7:05pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/24 "2010-06-05T19:05:09Z")
> [@Rumor\_Watkins](#): > > I know this doesn’t parse out deep sea drilling versus everything else, but > [According to OSHA](http://chartporn.org/2010/06/02/bps-safety-record/) > > in the past 3 years BP has had 760 willful safety violations to Exxon’s… 1 Interesting. [Following the link](http://www.publicintegrity.org/articles/entry/2085/) though it seems that they are not ahead of the pack for “serious” violations, running 30 to 1521 for other refineries. As that source put it > [@](#): > > In a letter to refinery managers last year, OSHA’s enforcement director, Richard Fairfax, wrote that in the previous 15 years, the refining industry had recorded “more fatal or catastrophic incidents related to the release of highly hazardous chemicals … than any other industry sector covered by the [process safety management] standard.” OSHA inspectors, Fairfax wrote, were finding “many of the same problems repeatedly.” … the refining industry group continues to treat calamities like those in Texas City and Anacortes as isolated incidents. Refiners also point misleadingly to their industry’s relatively low “recordable” illness and injury rates, which he says are not reliable predictors of catastrophic incidents. Federal law requires employers to record and report all occupational deaths, injuries, and illnesses. > > “BP had a very low recordable injury and illness rate before they blew up the [Texas City] plant,” Barab said. If the industry persists in using such rates as a measure of overall safety, he said, “It’s hard to take their commitment seriously.” ---
**Author:** ![Dallas\_Jones](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dallas_jones/32/3277_2.png) [@Dallas\_Jones](https://boards.straightdope.com/u/Dallas_Jones)\ **Post date:** [June 5, 2010, 7:35pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/25 "2010-06-05T19:35:32Z")
> [@gonzomax](#): > > They also have the money to get a staff of lawyers who will fight for decades. The 5 Bill in Exxon was cut in half in court and then later cut to 500 million . They made more money than that is just investing it for 20 years. The Alaskans that were left got an average of 15 thou. It is our system. Big advantage to the rich and powerful. A friend of mine, who held a gill-net permit for Prince William Sound during the Exxon Valdez spill got his final payment check just this last year, 20 years after the event! Piddling little amounts for loss of future income. The Gulf fishermen and local communities will be fed a small stream of money from BP while the litigation goes on. Many people will be starved out or move on and only the very persistant will see much compensation, and then only after a great deal of time has passed. That is just the way litigation works. The full costs will never be remitted to those suffering loss. The entire issue will fall off the public radar soon after the leak is capped. Then it’s down to the courts, lawyers, and whatever interested parties can hang in there long enough to recove some part of their losses. ---
**Author:** ![Tastes\_of\_Chocolate](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tastes_of_chocolate/32/3232_2.png) [@Tastes\_of\_Chocolate](https://boards.straightdope.com/u/Tastes_of_Chocolate)\ **Post date:** [June 7, 2010, 5:18pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/26 "2010-06-07T17:18:32Z")
I’ve read somewhere (I don’t remember where now) that BP had created BP LLC to handle their oil exploration. Does an LLC protect the parent company in how much it can be billed/fined/required to pay? ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [June 7, 2010, 5:25pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/27 "2010-06-07T17:25:51Z")
> [@Tastes\_of\_Chocolate](#): > > I’ve read somewhere (I don’t remember where now) that BP had created BP LLC to handle their oil exploration. > > Does an LLC protect the parent company in how much it can be billed/fined/required to pay? complicated question if the LLC’s veil is pierced, you can go after the owner’s assets to cover the debts of the LLC (typically in these kinds of facts you pierce when there is deliberate undercapitalization of the “risk-taking” subsidiary, or if the parent company isn’t treating the separate entity enough like a separate entity). However, they pay lawyers big bucks to make sure that the veil won’t prospectively be pierced, so it’s going to be difficult. Federal environmental legislation may also have something to say about the liability that a parent entity has to a subsidiary’s environmental liabilities. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [June 7, 2010, 5:32pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/28 "2010-06-07T17:32:43Z")
follow-up : i am not sure how the LLC form differs enough from a traditional “Corporation” to affect veil piercing. ---
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [June 7, 2010, 11:37pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/29 "2010-06-07T23:37:13Z")
> [@Joanie](#): > > I have always bought gas from a station that was fairly close to my home. Fortunately, that has never been a BP station. > > But I sure as hell would like to boycott BP stations from now on. Does that make any sense? I know that even if hundreds of thousands of people boycott BP, it won’t make much of a difference. But is it still a reasonable thing to do? Will it sent a message to the oil industry? If you want to screw with BP’s bottom line, write your representatives in Congress. Besides regulatory measures, drilling permits, etc, Congress can review BP’s contracts with the US military, which are worth $2.5 billion per year. Even then… there’s no real way to win on something like this. ---
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [June 9, 2010, 11:57am UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/30 "2010-06-09T11:57:21Z")
I’ve been wondering if BP is going to rename its US operations in an attempt to escape the bad publicity. Instead of “BP America” it would be “NexGen Energy” or something similarly innocuous. At this point, their reputation is in tatters, and the BP brand name is more of a liability than an asset. ---
**Author:** ![Tastes\_of\_Chocolate](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tastes_of_chocolate/32/3232_2.png) [@Tastes\_of\_Chocolate](https://boards.straightdope.com/u/Tastes_of_Chocolate)\ **Post date:** [June 9, 2010, 4:42pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/31 "2010-06-09T16:42:30Z")
> [@Diceman](#): > > I’ve been wondering if BP is going to rename its US operations in an attempt to escape the bad publicity. Instead of “BP America” it would be “NexGen Energy” or something similarly innocuous. At this point, their reputation is in tatters, and the BP brand name is more of a liability than an asset. I’ve been wondering if we will see the Amoco name come back, for the service stations. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [June 9, 2010, 7:49pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/32 "2010-06-09T19:49:14Z")
You get what you pay for - BP contracted out something critical like managing a drilling rig platform, and as a result they paid someone else to destroy their international reputation. I suppose the problem is, they could file for bankruptcy - say, Ch.11 not 7; but if the public mood was right, then the Feds would step in and declare that the liability was so high as to effectively take ownership away from them. (I.e. take shares instead of money for the remaining debt). As others point out, the income amount is so high, there’s no great savings. If you make $50,000 a year and sudddenly had an accident and did $3M worth of damage, you decclare bankruptcy. If you make $50K and acidentally do $60K worth of damage, but still have income - they’ll put you on “orderly payment of debt” process and it will hurt just as much but the court will guarantee they take as much as they possibly can every month til the debt is gone. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [June 9, 2010, 8:06pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/33 "2010-06-09T20:06:48Z")
> [@Diceman](#): > > I’ve been wondering if BP is going to rename its US operations in an attempt to escape the bad publicity. Instead of “BP America” it would be “NexGen Energy” or something similarly innocuous. At this point, their reputation is in tatters, and the BP brand name is more of a liability than an asset. What is the point? Why would BP care if the average person thinks BP is evil? BP sells a commodity, and they sell it to refineries, processing plants, midstream companies, chemical companies, and the like. BP essentially sells nothing on a retail basis. People are confused because they see gas stations that have a BP, Exxon, Chevron, etc name on them. Essentially none of those are owned by the company with the name on them. BP does not own retail gas stations in the U.S. Those have already been sold. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [June 9, 2010, 8:07pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/34 "2010-06-09T20:07:53Z")
> [@Tastes\_of\_Chocolate](#): > > I’ve been wondering if we will see the Amoco name come back, for the service stations. The service stations with the name BP on them in the U.S. are not owned by BP. ---
**Author:** ![Tastes\_of\_Chocolate](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tastes_of_chocolate/32/3232_2.png) [@Tastes\_of\_Chocolate](https://boards.straightdope.com/u/Tastes_of_Chocolate)\ **Post date:** [June 10, 2010, 12:10am UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/35 "2010-06-10T00:10:44Z")
> [@LonghornDave](#): > > The service stations with the name BP on them in the U.S. are not owned by BP. I know. But I’m guessing that the service stations are taking a hit due to name association. I could see the stations changing their names (or reverting to Amoco, as most of them in this area were originally) to get away from that. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 10, 2010, 2:06am UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/36 "2010-06-10T02:06:45Z")
> [@spark240](#): > > You seem to be using a circular definition of “final cost” to mean “whatever amount they end up paying,” whereas I interpret the phrase “make things right” to mean undoing their damage and restoring the Gulf environment to something close to what it was, as well as compensating those whose livelihoods have been wrecked in the meantime. I don’t see how it’s possible to restore everything. That sounds like a nebulous task without any sense of reality. What they CAN do is pay the direct financial damage to people and mop up a narrow bit of coast line. ---
**Author:** ![Duckster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duckster/32/1244_2.png) [@Duckster](https://boards.straightdope.com/u/Duckster)\ **Post date:** [June 10, 2010, 2:14am UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/37 "2010-06-10T02:14:50Z")
Getting back to the OP: > [@](#): > > **What do you think is in store for the future of BP?** > They have about a month before they declare Chapter 11. They’re going to run out of cash from lawsuits, cleanup and other expenses. One really smart thing that Obama did was about three weeks ago he forced BP CEO Tony Hayward to put in writing that BP would pay for every dollar of the cleanup. But there isn’t enough money in the world to clean up the Gulf of Mexico. Once BP realizes the extent of this my guess is that they’ll panic and go into Chapter 11. [http://money.cnn.com/2010/06/09/news/companies/simmons\_gulf\_oil\_spill.fortune/](http://money.cnn.com/2010/06/09/news/companies/simmons_gulf_oil_spill.fortune/) So says oil expert Matt Simmons. However, he is a bit controversial. ---
**Author:** ![Francis\_Vaughan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/francis_vaughan/32/3093_2.png) [@Francis\_Vaughan](https://boards.straightdope.com/u/Francis_Vaughan)\ **Post date:** [June 10, 2010, 7:17am UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/38 "2010-06-10T07:17:49Z")
The general concensus is that Matt Simmons has pretty well lost the plot on this one. He has been making assertions about the nature of the leak that simply don’t bear even simple scientific scrutiny. He isn’t an expert on oil technology - he is a financier. The general principle of the OP’s question is curiously vacuuous when applied to a corporate entity. If you ignore the curiosity of Chapter 11, the reality of “declaring backruptcy and walking away” doesn’t mean anything. The corpoarate entity is the assets. If it is bankrupt there are not enough assets to cover its liabilities. The entity will be carved, sold, liquidated, and whatever is needed to recover what money can be found to cover as large a portion of the liabilities as is possible. The process only stops when the entity is gone. There is no corporation that walks away. It is dead. This is one place where corporations are different to people. Shylock isn’t allowed to cut out his pound of flesh to settle a debt, but if you are a corporation he can, and will. ---
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [June 10, 2010, 11:53am UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/39 "2010-06-10T11:53:40Z")
> [@Tastes\_of\_Chocolate](#): > > I’ve been wondering if we will see the Amoco name come back, for the service stations. I’d forgotten about Amoco. They used to be Amoco around here too. I won’t be surprised a bit if they switch back. ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [June 10, 2010, 12:00pm UTC](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988/40 "2010-06-10T12:00:30Z")
This article is rather speculative: [http://www.nytimes.com/2010/06/08/business/08sorkin.html?scp=1&sq=BP%20bankruptcy&st=cse](http://www.nytimes.com/2010/06/08/business/08sorkin.html?scp=1&sq=BP%20bankruptcy&st=cse) It suggests that it may be possible for BP to split in two, one company of which will keep all the liabilities and the other as much of the assets that they can get away with. The former would go bankrupt, while the latter might be sold to one of the other majors. I didn’t think this was possible, but what do I know about business law. It strikes me that a serious possibility is that BP America could be split off from the international company. The article suggests that their liabilities could go as high as $40B. Supposedly liabilities for damages to third parties are limited to $75M, but you have to go into court with “clean hands”, which BP doesn’t have, in order to benefit from that limit. The article mentions that Exxon was originally fined $5B; this was reduced to 2.5B, then to .5B and finally SCOTUS canceled the fine. So they paid some (probably minimal) damages, but no fine. [Previous page](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988.md?page=1) [Next page](https://boards.straightdope.com/t/could-bp-just-declare-bankruptcy-walk-away/541988.md?page=3)