U.S. Judge OKs Enron Severance Package
A federal bankruptcy judge Wednesday approved Enron Corp.’s $28.8-million severance package, clearing the way for payments to workers fired when the former energy trader filed for bankruptcy protection in December.
Judge Arthur Gonzalez also extended a freeze on $12 million that former Enron executive Michael J. Kopper agreed to turn over to the U.S. government as part of his plea agreement, giving the courts several more weeks to decide whether the money belongs to shareholders or creditors.
The severance package ruling means that 3,553 employees will receive an average $6,850 each, up to $13,500.
The plan affects workers fired between Enron’s filing and the end of February. Employees laid off since February are covered under a separate severance agreement.
The court also allowed the former employees to challenge the more than $80 million in bonuses paid to senior executives in the month before Enron’s bankruptcy filing.
“This settlement puts real money into the pockets of people who need it most,” said Ronald Sussman, a lawyer for a panel of Enron’s former and current employees. “They arguably could have been left with nothing.”
The ruling on the $12 million came after the Enron creditors’ committee Monday sued Kopper and Enron’s LJM2 Capital Management affiliate in a bid to recover some of the more than $50 billion they’re owed. The creditors want to force the government to relinquish its claim on Kopper’s illegal gains.
At Wednesday’s hearing, lawyers for creditors and the government told the judge they agreed to leave the cash untouched until a hearing in mid-September. Gonzalez approved extending the freeze until then, subject to receiving a copy of the lawyers’ agreement.
The creditors’ committee, the Justice Department and the Securities and Exchange Commission agreed to a “stand-down from all action” seeking to move the funds, Luc Despins, a lawyer for the creditors’ committee, told Gonzalez at the hearing.
The Enron creditors’ committee and government lawyers also said the suit will be moved to U.S. District Court in Manhattan from Bankruptcy Court.
Partnerships that Kopper ran allegedly were used to hide $1 billion in Enron losses.
Kopper pleaded guilty last week to fraud and money-laundering conspiracies and agreed to surrender $12 million he confessed to obtaining illegally. He agreed to cooperate with U.S. investigators and implicated ex-Chief Financial Officer Andrew S. Fastow in the scheme to defraud the energy company’s investors.
LJM2, which Kopper once managed, is pursuing a lawsuit in Delaware seeking $6 million in fees paid to Kopper.
The Houston-based energy company filed for bankruptcy protection Dec. 2, the largest ever at the time, after disclosing that it used partnerships to conceal debt. Creditors are owed more than $50 billion. WorldCom Inc.’s bankruptcy filing last month surpassed this.
Meanwhile, the city of Portland, Ore., is considering a bid for Enron’s biggest utility company and may use government powers of condemnation to acquire it.
Portland General Electric was among the dozen assets Enron put up for sale Tuesday to pay off creditors. Five years ago, Enron paid $3.1 billion for the utility.
