Enron Creditors Want Case Moved to Houston
A group of Enron Corp. creditors will try to persuade a New York bankruptcy judge today to move the case to a court in Houston, where the energy company is based.
Large creditors, such as energy traders Dynegy Inc. and El Paso Corp., and smaller ones, such as the Southern Ute Indian Tribe of Colorado, believe it would be more convenient and economical to hear the case near the location of many of Enron creditors and assets. Dynegy and El Paso are based in Houston.
In a motion filed by Dynegy and other creditors, lawyers also say there is “an emotional interest to be served” by moving the case to Houston, where thousands of Enron employees were laid off and many more witnessed the rapid evaporation of their retirement plans when the company’s stock plummeted.
Analysts say these creditors might also be hoping for a potentially more favorable hearing in Houston, where the economy has suffered as a result of Enron’s demise.
Lawyers for Enron, and a handful of creditors opposed to relocating the proceedings, are expected to argue that it would be less expensive and more accommodating if the case were administered in New York, home to the armies of lawyers and bankers working on both sides.
Howard B. Comet, an attorney for Weil, Gotshal & Manges in New York, said it also would be easier for business partners and potential witnesses involved in Enron’s worldwide operations to participate if the proceedings took place in New York.
“The focus of the financial restructuring is here,” Comet said.
Citigroup Inc. of New York, Barclays Bank of London and Dresdner Bank of Frankfurt are among the creditors opposed to changing venues.
Under the federal rules of bankruptcy procedure, a case may be transferred from one district court to another “in the interest of justice or for the convenience of the parties.”
The basic criteria considered by judges ruling on previous change-of-venue motions have been the proximity of creditors, debtors and witnesses; the location of assets; and the cost.
Experts say few cases of this size have been moved but Judge Arthur J. Gonzalez could be swayed by the fact that so many of Enron’s energy-trading partners are in and around Houston.
Enron collapsed late last year when revelations of questionable accounting practices and mounting debt caused investors and traders to lose confidence in the company. The company lost $60 billion in market value over the last year.
Enron filed for protection from creditors under Chapter 11 of federal bankruptcy law Dec. 2 in the U.S. Bankruptcy Court for the Southern District of New York.
