Texaco's Star Falls

Facing a $10 billion penalty, the oil company chooses bankruptcy

Never have the stakes in a corporate battle been higher. After losing a crucial decision in the U.S. Supreme Court last week, Texaco faced the disastrous prospect of having to post a $10 billion bond in its epic legal fight with Pennzoil. As its stock plummeted and its credit began to dry up, the company was thrown into a financial crisis. Over the weekend, Texaco's board of directors gathered for an emergency meeting at the firm's White Plains, N.Y., headquarters. Following a marathon discussion, the directors chose a stunning course: the eighth largest U.S. industrial corporation (1986 sales: $32.6 billion) and...

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