Enron Corp.'s 900-page roadmap to emerge from one of the most expensive and complicated bankruptcies in U.S. history is ready for a judge to give it a thumbs-up.
On Thursday, U.S. Bankruptcy Judge Arthur Gonzalez in New York will convene what is expected to be a hearing of up to a week to consider confirmation of Enron's reorganization plan. Fewer than 10 objections of about 100 filed remain unresolved in regard to the framework that proposes to pay most creditors about one-fifth of the approximately $66.4 billion they are owed in cash and stock.
Last week creditors certified the plan, which has been tweaked to resolve objections since it was first presented to Gonzalez in January. If Gonzalez confirms it as expected, Enron can begin carrying it out.
"We can hear the whistle blowing, the train is on the way, and the few remaining dissenters will one way or another be pushed out of the way," said Martin Zohn, a bankruptcy law expert. "Once the court approves the plan with an order, the starting gate is open and the lawyers, accountants and business people are ready to proceed."
Total meltdown avoided
Martin Bienenstock, Enron's main bankruptcy lawyer, said Enron lumped the bankrupt parent and its 179 bankrupt subsidiaries together to simplify the process. He noted that the scandal-choked company managed to preserve non-bankrupt assets rather than give up and liquidate.
"We were so close to a total meltdown where things just would have stopped," he said. "To pull together the capital and theories and plans to keep all those businesses going when the whole world didn't trust us and didn't know what our assets and liabilities were — I wouldn't have predicted that at first."
Under the plan, creditors will receive about $11 billion in cash and stock. That $11 billion, as proposed, would be distributed 70 percent in cash and 30 percent in stock in each of three companies: CrossCountry Energy Corp., which comprises Enron's whole or part interest in three domestic natural gas pipelines; Prisma Energy International Inc., a smattering of pipeline and power assets in 14 countries, mostly in Latin America; and Portland General Electric, Enron's Pacific Northwest utility.
Sales of two of those companies are pending. Last year, Enron announced plans to sell Portland General to an investment group backed by Texas Pacific Group for $1.25 billion in cash and $1.1 billion in assumed debt. Earlier this month, Enron announced plans to sell CrossCountry to a company run by Texas billionaire Oscar Wyatt Jr. for $1.8 billion in cash and $430 million in assumed debt.
If those sales close later this year as expected, the 92 percent of the $11 billion would be distributed in cash and the remaining 8 percent would be in Prisma stock, Enron spokeswoman Karen Denne said Wednesday. An auction is expected to be held later this year to allow other buyers to submit higher bids for CrossCountry.
Enron, once No. 7 on the Fortune 500, went bankrupt in December 2001 amid revelations of hidden debt, inflated profits and accounting tricks. Thousands of workers lost their jobs and millions of investors saw their shares plummet to pennies.
Twenty-nine people, including former CEO Jeffrey Skilling and former finance chief Andrew Fastow, have been charged with crimes in the Justice Department's ongoing probe of what caused the collapse. Fastow is among 10 former executives who have pleaded guilty, while Skilling is among 19 who have pleaded innocent and are facing trial.