Bankrupt Enron Corp. aims to open the coming year with a major step in its plan to emerge from one of the most complex and expensive Chapter 11 cases in history.
Barring a last-minute delay, the Houston-based company is scheduled to present its thrice-revised reorganization plan to U.S. Bankruptcy Judge Arthur Gonzalez in New York next week for preliminary approval. If the judge grants that initial blessing, the company will start negotiating payment of claims for which agreements haven't already been reached.
"It's like a gigantic prospectus," Anthony Sabino, an energy and bankruptcy law expert at St. John's University in New York, said Monday. "Its major components are where they've been, where they are and where they are going to go."
The original reorganization plan was filed in July and has had two revisions as the list of about 24,000 creditors continues to be whittled down. The latest version slightly increased the cents-on-the-dollar to be paid, but it still proposes paying most creditors about one-fifth of the approximately $66.4 billion they are owed.
Enron spokeswoman Karen Denne said Monday that creditors can voice objections to the plan at the Jan. 6 hearing, but settlements have already been reached for many claims since the first version of the plan was filed.
A dispute between Enron and Harrison Goldin, a court-appointed examiner overseeing the company's defunct trading unit, Enron North America, threatened to hold up initial approval of the plan. Goldin objected to the company's intended treatment of guaranty claims, or energy contracts between the trading unit and its creditors.
Enron had planned to ask that those claims be invalidated. The compromise, noted in the third revision of the plan filed this month, allows those creditors to receive 50 percent of the value of their claims.
Enron intends to emerge from bankruptcy as two new companies with different names. Of those, a domestic business, CrossCountry Energy Corp. will have Enron's full or partial interest in three North American natural gas pipelines. The second company, to be called Prisma Energy International Inc., includes 19 international power and pipeline holdings.
The proposed reorganization plan calls for creditors to be given cash and stock in the new companies. Claims must be settled before equity in the new companies can be distributed.
Last month Enron announced it would sell its Pacific Northwest utility, Portland General Electric, to a partnership backed by investment funds managed by Texas Pacific Group for $1.25 billion in cash and $1.1 billion in assumed debt. The deal, pending approval from Gonzalez and regulators, is slated to close in mid-2004.
Enron, once No. 7 on the Fortune 500, had more than 20,000 employees worldwide before the company imploded two years ago amid revelations of hidden debt, inflated profits and accounting tricks.