Duuvian
Arguably, wouldn't it be better for BP to be able to pay off their massive debt than simply bankrupt them? If they go belly-up, there would be less reparations, unless I'm completely missing something about the way economics works.
Hmm, I'm not sure where you quoted from. Was it my mis-post in another thread? I went and deleted that once I realized I had mis-posted. Here is what I had written (before I made the post above); so I would understand if that's what you are referring to:
Is anyone trying to figure out alternatives to the solutions that involve ruining the well as far as further production of oil? It would be nice to see the oil under federal protection. BP's solutions always seem to be centered around making sure the well is ruined for future use. It seems that if they have several safety valves to release oil in case of a spill, they should be able to attach a hose to it, in simple terms. Then you wouldn't have to waste the oil if you had half of the hoses attached to stationary, floating tanks that would be emptied into a tanker after use. That way there wouldn't be oil spraying everywhere while you move a new supertanker in position to use the other half of hoses. All you would have to do is shut off the flow to the first ship and into the empty tanks while a new ship takes position. Then switch back. Then empty the tanks into a ship from the 3rd fleet of ships specifically for that purpose. Then after the tanker is full, repeat the process. I'd assume the government has re-fueling ships of their own; if BP can't find a solution that doesn't involve wasting a valuable resource perhaps the government should.
EDIT: I should clarify that by National protection in my previous post in this thread that I meant that companies are welcome to drill, extract, and refine it as they do now, but it would be illegal to waste, destroy, or mothball resources in whatever form they are in. They should be used for public consumption, not to be destroyed or stockpiled in the hope of driving up prices on what is allowed on the market. This will probably be more and more of an issue as global oil supplies deplete in the future.
If it's not that, I'd have to see what my original post that you quoted to see what I was saying and thinking at that time and what you are referring to before I answer.
I'm also unsure how bankruptcy law functions as I haven't read any books about it so I may be the wrong person to ask. As far as the reparations go, I have no idea how that's being handled so I'm probably doubly wrong the person to ask. Does anyone know what reparations BP has agreed upon to this point and who is in charge of distributing them?
EDIT2: A few quick reparations links:
Here is something from wikipedia about bankruptcy laws in the UK. I don't know if BP and other multi-nationals qualify as a UK company for bankruptcy or if they are free to choose the country with the loosest laws. Also, it appears in the UK that companies are not eligible for bankruptcy; instead choosing between liquidation or administration (which according to the wiki link below is is similar to chapter 11 with a few differences)
http://en.wikipedia.org/wiki/BankruptcyUnited Kingdom
Main articles: Bankruptcy in the United Kingdom, Liquidation, and Administration (insolvency)
In the United Kingdom, bankruptcy (in a strict legal sense) relates only to individuals and partnerships. Companies and other corporations enter into differently-named legal insolvency procedures: liquidation and administration (administration order and administrative receivership). However, the term 'bankruptcy' is often used when referring to companies in the media and in general conversation. Bankruptcy in Scotland is referred to as sequestration.
A trustee in bankruptcy must be either an Official Receiver (a civil servant) or a licensed insolvency practitioner.
Current law in England and Wales derives in large part from the Insolvency Act 1986. Following the introduction of the Enterprise Act 2002, a UK bankruptcy will now normally last no longer than 12 months and may be less, if the Official Receiver files in court a certificate that his investigations are complete.
It was expected that the UK Government's liberalisation of the UK bankruptcy regime would increase the number of bankruptcy cases; the Insolvency Service statistics appear to bear this out;
UK Bankruptcy statistics Year Bankruptcies IVAs Total
2004 35,989 10,752 46,741
2005 47,291 20,293 67,584
2006 62,956 44,332 107,288
2007 64,480 42,165 106,645
2008 67,428 39,116 106,544
After the increase in 2005 and 2006 the figures have remained stable.
http://en.wikipedia.org/wiki/LiquidationIn law, liquidation is the process by which a company (or part of a company) is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation. The process of liquidation also arises when customs, an authority or agency in a country responsible for collecting and safeguarding customs duties, determines the final computation or ascertainment of the duties or drawback accruing on an entry.[1]
Liquidation may either be compulsory (sometimes referred to as a creditors' liquidation) or voluntary (sometimes referred to as a shareholders' liquidation, although some voluntary liquidations are controlled by the creditors, see below).
http://en.wikipedia.org/wiki/Administration_orderAdministration, as a legal concept, is a procedure under the insolvency laws of a number of common law jurisdictions. It functions as a rescue mechanism for insolvent companies and allows them to carry on running their business. The process – an alternative to liquidation – is often known as going into administration.
United Kingdom
See also: UK insolvency law
In United Kingdom law, the administration regime is governed by the Insolvency Act 1986, as amended by the Enterprise Act 2002. An "administrator" can be appointed without petitioning the court by the holder of a floating charge (created since 15 September 2003), by the company or by its directors. Other creditors must petition the court to appoint an administrator. The administrator must act in the interests of all the creditors and attempt to rescue the company as a going concern. If this proves impossible she or he must work to maximise the recovery of the creditors as a whole. Only then may the administrator attempt to realise property in favour of one or more secured creditor. Administration is analogous to going into "Chapter 11" in the United States, although there are certain key differences, mainly stemming from the fact that English law does not include the debtor in possession concept. During the reorganisation period, as a result, the administrator usually runs the business rather than the directors, and any additional liquidity requirements effectively have to be met by funds provided by existing creditors rather than by any super-senior 'DIP financing'.
The administrator is an officer of the court and an agent of the company, and is not personally liable for any contracts she or he makes on behalf of the company. He has the power to do anything necessary or expedient for the management of the affairs, business and property of the company.
The new administration regime introduced by the Enterprise Act 2002 replaces the previous situation where administrative receivership was available as an alternative to administration, which has traditionally been a more rescue-oriented insolvency regime. This regime allowed the holder of a floating charge to appoint an administrative receiver to realise assets in his favour, and also to block an administration order sought by a borrower. This was felt to be too favourable to the floating charge holder at the expense of other creditors. Holders of a floating charge created prior to 15 September 2003 retain their right to appoint an administrative receiver, but all purported rights to do so created after that date will be construed as rights to appoint an administrator (subject to certain specific, rare exceptions).
A court order is issued that forbids any form of legal or insolvency action without the court's permission. An application to the court for an administration order may be made by the company, the directors, a creditor or any combination of them. The Enterprise Act 2002 amended the Insolvency Act 1986 to provide an out-of-court process to appoint an administrator to the holder of a floating charge or the company or its directors. This is considerably cheaper and simpler than the previous system, which involved an application to court.
So, actually, the way to get the most "reparations" would be if the company was liquidated and the wealth distributed to those areas affected by the spill for cleanup work and to cover whatever damages to fishermen that occurred and other damage to the local economy. HOWEVER, BP employs a relatively large amount of people. [80,300 (Dec 2009)] so as long as they are unable to wriggle out of being heavily regulated then I would say it would be a good question whether a large one time infusion of cash caused by liquedation of BP
(Revenue US $246.1 billion (2009)[2]
Operating income US $26.43 billion (2009)[2]
Net income US $16.58 billion (2009)[2]
Total assets US $236.0 billion (2009)
Total equity US $101.6 billion (2009))
is worth the long term cost of those 80,300 jobs. Plus, there is the risk that the competitor's prices will theoretically be affected by losing a large competitor, being allowed access to their former wells, possible expansion of other oil companies caused by this and encouraged by an infusion of knowledgeable personnel and equipment. There are really a lot of factors. The best answer to bankruptcy in this case would likely be going into administration and encouraging a moralistic driven approach in the future in addition to the money making aspect of corporations.
All that having been said, BP isn't at risk of bankruptcy yet, right? I noticed in the spoiler above that they make an operational income of about $26.5 billion a year. By this definition:
In accounting and finance, earnings before interest and taxes (EBIT) or operating income is a measure of a firm's profitability that excludes interest and income tax expenses.[1]
EBIT = Operating Revenue – Operating Expenses (OPEX) + Non-operating Income
Operating Income = Operating Revenue – Operating Expenses[1]
Operating income is the difference between operating revenues and operating expenses, but it is also sometimes used as a synonym for EBIT and operating profit.[2] This is true if the firm has no non-operating income.
depending on BP's income tax rate and interest rate on what they have saved, the $20 billion dollar escrow fund could be greater than the profits BP makes in a year, thus encouraging them to sell some assets as I've read in the news recently they were forced to do. I'm not making any points with this statement, just something to think about.
Also, what are people's opinions on Federal controlled oil companies in competition with the private? I'm not talking trying to drive them out of business, just as a way of regulation through competition and as a way to ensure having the tools exist that would have been helpful in stopping the leak 80 days ago, in addition to having the tools to map national oil reserves without having to trust corporations to be honest about the way they make money without being able to tell if they might be lying. I'd be happy with just having those tools in the hands of government instead of government being competition, which I understand many people are leery of, it just seems like it would be easier to pay for these things by turning a small profit.