Enron Creditors to Query Andersen

A U.S. Bankruptcy Court judge Wednesday gave Enron Corp. creditors permission to investigate Arthur Andersen’s plans to sell assets, restructure or liquidate.

Judge Arthur J. Gonzalez gave the 14-member official committee of Enron’s unsecured creditors the authority to subpoena documents about Andersen’s restructuring efforts.

The committee is determining whether to sue Andersen to try to preserve the accounting firm’s dwindling assets, according to the panel’s lead attorney, Luc Despins of New York firm Milbank, Tweed, Hadley & McCloy. Enron creditors, employees and stockholders view Andersen’s assets as a source of funds to help pay damages that may be awarded in lawsuits arising from the Enron collapse.

Andersen, Enron’s former corporate auditor, is under fire for approving the questionable accounting treatment of a number of controversial transactions that led to Enron’s collapse last fall. Hurt by its association with Enron, Andersen is bleeding clients and making deals to sell its tax, audit and consulting operations.

Participants in the Enron bankruptcy also learned Wednesday that a court-appointed special examiner, who will investigate Enron’s collapse, may be nominated as soon as Friday.

U.S. Trustee Carolyn S. Schwartz, in charge of screening candidates, told Gonzalez that she has selected a candidate after a nationwide search but needs to complete her review of potential conflicts of interest before submitting the person’s name to Gonzalez, perhaps by Friday.

Gonzalez also said he would rule today on a motion to disqualify law firm Milbank Tweed from serving as chief attorney for the official committee of unsecured creditors.

Creditors not serving on the committee challenged Milbank Tweed, saying the firm’s role in certain controversial Enron transactions presents a conflict of interest that can’t be resolved. Milbank Tweed pointed out that the creditors committee, composed of 14 banks, energy firms and other large and sophisticated corporations, many with their own independent legal representation, voted unanimously to retain the law firm.