Bankruptcy for BP: The big 'What if?'

TALLAHASSEE, Fla., July 10 (UPI) -- If currents carry oil to East Coast states, Cuba and other Caribbean nations, liability lawsuits could hit levels BP could not handle, a U.S. expert said.

Most experts call the possibility of bankruptcy of the international oil giant unlikely.

But in worst-case scenarios -- containment efforts failing and currents carrying the oil hundreds of miles -- bankruptcy becomes a much more likely possibility, Robin Craig, associate dean for environmental programs at Florida State University College of Law, told The New York Times

"My bet is that BP will finally go bankrupt from the tort liability and the environmental liability," Craig said. "Hypothetically, a blue-fin tuna farmer in the Mediterranean could end up with a claim against BP."

The Times noted even those who believe it's unlikely BP, with more than $260 billion in assets, would file for bankruptcy protection acknowledge the need to carefully consider the possibility as environmental costs and economic claims climb.

"They've got a duty to their shareholders and others to consider every possibility," said Samuel J. Gerdano, executive director of the American Bankruptcy Institute. "It's not a matter of panic, it's not a matter of irrationality. It's a cold-hearted and clear-headed consideration of options."

A BP spokesman, Max McGahan, declined to comment. BP has continually said it has strong cash flow and billions of barrels of oil and would withstand litigation or settlement payouts.

As BP pinned hopes on a new cap on the well a mile underwater to stop the leak, The Times reported a previously unreleased memo by the Congressional Research Service weighed how a BP bankruptcy filing could disrupt the cleanup and compensation.

The letter, prepared in response to questions from Sen. Thomas Carper, D-Del., stated that in bankruptcy, economic and environmental claims would fall into line behind the company's secured creditors as "non-priority, unsecured claims." That would likely leave much of the continuing cost of cleanup to the federal government, the Times said.