Enron gets OK to emerge from Chapter 11 bankrutpcy protection, without name or most assets
Thursday, July 15th 2004, 9:11 am
By: News On 6
HOUSTON (AP) _ The plan to bring Enron Corp. out of bankruptcy _ and to break up its remaining pieces _ received court approval Thursday. The Enron name will disappear and creditors will get back less than 20 cents on the dollar.
U.S. Bankruptcy Judge Arthur Gonzalez in New York signed off on Enron's plan to exit Chapter 11 bankruptcy protection with no notable adjustments.
Houston-based Enron went bankrupt in December 2001 amid revelations of hidden debt, inflated profits and accounting skullduggery. Thousands of workers lost their jobs and investors who hadn't already bolted watched their shares become worthless.
Dozens of people, including Enron founder and former chairman Kenneth Lay, former CEO Jeffrey Skilling and former finance chief Andrew Fastow, have been charged with crimes in the Justice Department's ongoing probe of what caused the collapse.
Fastow is among 10 former executives who have pleaded guilty, while Lay and Skilling are among 20 who have pleaded innocent and are facing trial.
The ventures that once defined Enron as a leader in energy and other markets, such as trading and broadband, are long gone. The reorganization plan aims to pay most of the more than 20,000 creditors about $12 billion of the approximately $63 billion they are owed in cash and stock in one of three new companies created under the plan from Enron's remains.
Sales are pending for two of those companies _ CrossCountry Energy Corp., which comprises Enron's whole or part interest in three domestic natural gas pipelines, and Portland General Electric, its Pacific Northwest utility. The third is Prisma Energy International Inc., a smattering of pipeline and power assets in 14 countries, mostly in Latin America.
If the sales of CrossCountry and Portland General go through as expected, the $12 billion will be distributed to creditors with 92 percent in cash from asset sales and 8 percent in Prisma stock. If one or both of the sales of the two companies crumble, creditors will receive less cash and more stock in the multiple companies.
The massive bankruptcy generated more than $665 million in fees for lawyers, accountants, consultants and examiners, according to the Texas attorney general's office.
Last year, Enron announced plans to sell Portland General to an investment group backed for $1.25 billion in cash and $1.1 billion in assumed debt.
CrossCountry has so far attracted two offers. Texas billionaire Oscar Wyatt Jr., offered $2.2 billion in May. Last month a joint venture of Southern Union Co. and GE Commercial Finance Energy Financial Services offered $2.3 billion. Gonzalez will consider those and any other bids at a Sept. 1 auction, and is slated to approve the winning bid Sept. 9.