Citigroup Inc. agreed to pay $1.66 billion to settle its part of what has been called the the MegaClaims litigation in the Enron bankruptcy case. In the deal, Citi also agreed to waive $4.25 billion of claims against Enron.
Citi said that the settlement includes a denial of any wrongdoing, and that the bank has agreed to the settlements solely to eliminate the uncertainties, the burden, and the expense of further protracted litigation.
The settlement concludes the MegaClaims litigation and allows Enron Creditors Recovery Corp. to return over $5 billion to creditors of the Enron Estate. The MegaClaims suit was filed in 2003 by Enron Creditors Recovery Corp. against 11 global banks
“We are pleased to have reached a successful resolution of the two largest outstanding matters dating from the Enron dispute,” the bank said in a statement.
“I am very proud of the value we have been able to recover on behalf of creditors through the MegaClaims process,” said John Ray III, Enron Creditors Recovery Corp. President and Chairman of the Board. “Reaching an agreement with Citi enables the Estate to avoid the costs of protracted litigation, and it accelerates distribution to creditors of significant cash trapped in the Estate.”
Reuters points out that the $1.66 billion payout works out to 60 percent of the $2.8 billion Citi had reserved for legal payouts.
The Enron settlement agreements must be approved by the bankruptcy court.