Bankruptcy
When Edward M. Carey sold Carey Energy Corporation to Charter in 1979, his comment was: "Being in the oil business is like having a bear by the tail. You have to keep feeding it. You have to feed it to get it to perform."
At the time, Carey's bear (Carey Energy) had been in a prolonged mauling mood because he was unable to feed it (obtain a source of crude oil for the refinery). Five years later, the bear was hungry and got angry again.
One of the primary reasons for Charter's bankruptcy was the financial market. Oil prices dropped sharply and companies lost their ability to get trade credit, so they were unable to purchase crude oil (feed the bear) and that forced Charter into Chapter 11, according to Mason.
The Charter Company and 43 subsidiaries (including IPC) filed for protection under Chapter 11 of the bankruptcy law on April 20, 1984. In conjunction with the Bankruptcy filing, the company laid off 200 people in its Jacksonville office—which represented almost a 50% loss—and an equal number in Houston.
Mason sold Epping Forest to Herb Peyton in 1984 and resigned as Charter's Chairman. Company president Zeke Zechella retired the following year. Most of the company's subsidiaries were sold off before emerging from court protection in 1987. Creditors received Charter stock representing a 50.5% ownership in the company in payment for Charter's debts. Carl Lindner acquired control of Charter in bankruptcy court. One notable element of Charter's bankruptcy was stockholder equity. Typically, company stock would be worthless, but Jacksonville attorney Stephen Busey, who represented Charter in the legal proceedings, stated that it is unusual for shareholders to get as much value as Charter's stockholders did.
Read more about this topic: Charter Company, Troubles
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