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A source close to the negotiations said that by Thursday night Texaco had presented Pennzoil with four proposals regarding the bond dispute and five possible final settlements. "Pennzoil rejected each offer," he recalled. "But they refused to make any counteroffers." Pennzoil's attorneys argued that Texaco's offers were all similar and grossly inadequate.
Liedtke and Kinnear talked twice by phone on Friday. Kinnear sent over one last proposal, and Liedtke rejected it. That evening Kinnear and DeCrane gave up and flew back to New York. Texaco's lawyers then filed an affidavit with the Texas appeals court in which the company swore that it could not afford to put up more than $500 million in additional assets for a bond. The maneuver seemed designed to put extra pressure on Pennzoil to accept a settlement. In response, Pennzoil proposed to the court that Texaco could set aside assets worth about $5 billion for a bond without being forced into Chapter 11. Said Pennzoil Attorney Irvin Terrell: "Everyone has a constitutional right to file for bankruptcy, but it would be absolutely irresponsible for them to do so."
Now that Texaco has chosen that route, its battle with Pennzoil will go on. Under the protection and supervision of a bankruptcy judge, Texaco will undoubtedly keep fighting the most gargantuan legal judgment in history. If it exhausts all appeals in the Texas courts, the company's survival could once again wind up in the hands of the nine Justices of the U.S. Supreme Court.