Bankruptcy an Option for BP?
Many have been asking how likely it is that British Petroleum will declare bankruptcy. As with individuals, often corporations have other options to exhaust before filing in Chapter 11. Large oil companies like British Petroleum often have an enormous amount of assets, which is of course also reflected in their market capitalization. BP could sell its debt, could reduce capital expenditures, it could curtail its 10 billion a year in dividends, or tap into its tangible assets. As a result, Chapter 11 is not likely for a company as wealthy and established as BP. Chapter 7, which is straight liquidation of its assets, is likely not even on the radar screen. Contrast this with GM where the balance sheet and available resources were far more scarce, making a reorganization of that company necessary.
Bankruptcy is hardly ever an option for most people or entities until liabilities vastly outweight assets, because assets can be used to develop systems, programs, or opportunities for reorganization prior to the additional legal helps that are available. Especially with large corporations, lack of confidence may also result from the filing of the petition itself.
