Bankruptcy

Enron Settles Suits for $149 Million

Lenders will pay the former energy giant, which had sought recovery of commerical-paper payments made before its 2001 bankruptcy.
Stephen TaubJuly 18, 2007

Enron Creditors Recovery Corp. will receive $149 million from 72 of its lenders to settle a lawsuit that sought recovery of commercial-paper payments made just before the one-time energy giant filed for bankruptcy in 2001.

The lenders signing the settlement, according to Bloomberg News, included Lehman Commercial Paper Inc., Northern Trust Corp., Allstate Life Insurance and Prudential Insurance Co. Based on an announcement by Enron Creditors Recovery, the report said the settlement resolves claims against some parties who received Enron commercial paper payments.

Houston-based Enron Creditors Recovery said that it is continuing to prosecute the lawsuit against other defendants who received similar payments. In November 2003, it said, Enron sought to recover commercial paper payments from about 180 defendants.

“We are pleased to have resolved our differences with the settling defendants and believe this to be a significant milestone in the recovery process and our efforts to provide maximum value to creditors,” said John J. Ray III, Enron chairman and president. “We are hopeful that we can reach resolution with the remaining defendants.”

The settlement remains subject to the approval of the United States Bankruptcy Court for the Southern District of New York.

Bloomberg said that Enron paid $1 billion to commercial paper holders from Oct. 26, 2001, through Nov. 6, 2001, before the securities had matured. The company filed for bankruptcy on Dec. 2, 2001, and emerged from court protection in November 2004.