Bankruptcy Unlikely to Save BP

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By now, almost everyone realizes that the oil spill by the BP Deepwater Horizon oil rig in the Gulf of Mexico is the worst in history. Already, the British oil company has spent $1.43 billion to stop the flow of oil and clean up the environment since the accident on April 20. This does not include the potential payouts on over 200 lawsuits that have been filed against the oil company thus far.

According to a Credit Suisse report, BP’s liability might come up to $37 billion in damages and clean up costs on the 5 states (Florida, Louisiana, Texas, Alabama and Mississippi) affected by the oil spill that has threatened wildlife, wetlands, fishing and tourism. The potential liability for BP has been so high that analysts have predicted bankruptcy as one of the ways out. But while filing for bankruptcy would cancel some debts, it will not enable BP to evade having to pay for most damages and cleanup costs. Bankruptcy lawyers feel that it is unlikely that any claim would be too large of itself for BP to pay.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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