BP Chapter 11 Blow Out Risks

BP (BP) is wrestling with the financial fall out of the Gulf deep water well disaster. The Obama administration just made arrangements for $20 Billion in claims. It has been called extortion. Credit Default Swap costs for BP debts are astronomical. BP is no longer a financial model. BP is most definitely a political model.

Some call for BP to enter Chapter 11 and blow off critical responsibilities. If they attempt Chapter 11, Obama’s posse will intervene and meddle. The shareholders may loose everything. BP will be made to honour obligations and not run away. Shareholders that are pension funds may see some interesting legislation enacted to protect widows and orphans.

The blow out may follow the law of unintended consequences and give Obama the political leverage in many other area’s it has been looking for.

Corporate America needs to buckle up.

Disclosure: No position in any stocks mentioned in this post.