U.S. Bankruptcy Judge Arthur Gonzalez approved Enron Corp.’s Chapter 11 reorganization plan today in New York, under which $63 billion of claims will share about $12 billion in cash and the value of stock in newly formed companies that will hold and probably sell Enron assets.
Enron now employs 9,300 people, about a third as many as before its bankruptcy filing. Inasmuch as the Enron plan essentially calls for a going concern liquidation of Enron’s assets, most of the employees who are left will become employees of other companies that will hold and then sell Enron’s assets.
Enron’s domestic pipelines are being transferred to CrossCountry Energy Corp., which Enron is currently selling at a rather lively auction. Enron is awaiting regulatory approval on a sale of Portland General Electric, its Oregon utility, to a group headed by Texas Pacific Group, a Fort Worth, Texas, investment concern. A substantial portion of Enron’s remaining foreign assets are being transferred to a new entity, Prisma Energy International Inc., which may be sold or spun off to creditors.
However, the main legacy of Enron’s plan is the litigation that Enron’s bankruptcy has generated. Literally hundreds of lawsuits have been filed against former employees, trading partners, and many financial institutions that furnished money to partnerships that Enron used to mask its highly-leveraged financial condition. Those cases will continue to drain attorneys’ fees from Enron’s bankruptcy estate for years.
The Enron bankruptcy estate has already paid Enron’s attorneys, various other committee attorneys, and two examiners’ attorneys in the hundreds of millions in attorneys fees. When the final professional fees tab is calculated, the Enron case almost certainly will be the most expensive chapter 11 case in the history of reorganization law in the United States.