Enron Trustee Reviews Banks

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Bloomberg News

The U.S. trustee in Enron Corp.’s bankruptcy case is reviewing a request to remove Citigroup Inc. and J.P. Morgan Chase & Co. from the committee representing the energy trader’s creditors because of an alleged conflict of interest.

Exco Resources Inc. told Trustee Carolyn S. Schwartz that the banks should be disqualified because the committee is responsible for returning the most money possible to Enron’s creditors. That may mean seeking funds from the banks, which were named in a lawsuit alleging they helped hide Enron debts and collected fees in the process.

“We would not take a member of the committee off based just on allegations of a lawsuit if the member is fulfilling its fiduciary obligation to all creditors,” Schwartz’s spokeswoman, Jane Limprecht, said Thursday. “We will be looking to see if that requirement has been fulfilled.”


J.P. Morgan and Citigroup declined to comment.

The creditors committee, appointed by the trustee in December, determines how more than $40billion in Enron’s debts will be resolved. Its approval also is needed for any settlement of $28billion sought by Enron shareholders, bondholders and employees, who have an inferior status to creditors as Enron claimants.