A U.S. Bankruptcy Court approved Enron Creditors
Recovery Corp.’s $1.66-billion MegaClaims litigation settlement with
Citigroup, effectively closing the suit.
The money returned to Enron creditors through this and other arrangements will bring the total of such creditor returns to $20 billion, according to a leader of the creditors group.
Under terms of the latest settlement, reached March 26, Citigroup also agreed to waive $4.25 billion of claims against Enron.
The MegaClaims suit was filed in 2003 by Enron Creditors Recovery against 11 global banks.
Reuters earlier had pointed out that the $1.66 billion
payout worked out to 60 percent of the $2.8 billion Citi had reserved for legal payouts.
In addition to the cash settlement of $1.66 billion, the agreement will release about $1.7 billion of cash held in a disputed claims reserve, which will be included in a special distribution to
creditors in the near term.
“The settlement with Citigroup marks an important
milestone in winding up the Enron Estate, and we are
pleased that today the court approved the settlement,”
said Enron Creditors President and Chairman John Ray III. “Upon
implementation of the settlement, the Enron estate expects to return approximately $5 billion to creditors, which brings us to nearly $20 billion in total returned to creditors.”
At the time that it agreed to the settlement, Citi
said it included a denial of any wrongdoing, and that
the bank agreed to the settlements solely to eliminate
the uncertainties, the burden, and the expense of
further protracted litigation.
Enron Creditors Recovery had alleged that
with the help of banks like Citigroup, Enron kept
creditors in the dark about the company’s financial
troubles by using shady accounting.