The turnaround expert who led Enron Corp. through one of the most complex and expensive bankruptcies in history said Tuesday that his work is worth $25 million.
"I think this has been a remarkable success," Stephen Cooper, told U.S. Bankruptcy Judge Arthur Gonzalez at a hearing in New York. The hearing concerned his request for a "success fee" as well as final fee and expense requests from lawyers, accountants and other professionals involved in the massive Chapter 11 case.
Cooper has been Enron's interim CEO since January 2002.
Gonzalez said he may rule later Tuesday on whether to approve Cooper's request and more than $689 million in final fee and expense requests from others. The $689 million was reduced from more than $714 million by a court-appointed committee assigned to review fees and expenses in the bankruptcy.
Overall, such fees in Enron's bankruptcy surpassed $1 billion, the most of any bankruptcy case ever, according to Lynn LoPucki, a UCLA law professor who tracks bankruptcy fees.
Cooper said he and his firm deserved $25 million for guiding Enron through its complicated bankruptcy without selling major assets at fire-sale prices in the bleak economy of the immediate post-bankruptcy years. He and his firm have already received $107 million in professional fees.
Enron went bankrupt in December 2001 in a scandalous swirl of fraudulent accounting, hidden debt and inflated profits. Thousands of employees lost their jobs and investors lost billions.
"The company was in a state of just total chaos and it had a very high potential to be just a complete meltdown," Cooper testified Tuesday of what he encountered when Enron hired him. "In fact, all the marketplace buzz was that this was going to be a short fire-sale liquidation."
The company quietly emerged from Chapter 11 a year ago, and Cooper's firm credits itself for wrapping up the case in three years. Gonzalez in July 2004 approved a reorganization plan that calls for most creditors to receive about one-fifth of the estimated $63 million they're owed in cash and stock.
Many Enron assets crumbled alongside the company, including its once-envied trading business that never made a profit after Swiss investment bank UBS acquired it.
But Enron's whole or part interest in three domestic natural gas pipelines, an Oregon utility and a collection of international pipeline and power assets remained.
Enron last year sold its domestic pipeline interests to a joint venture of Southern Union Co. and a unit of GE Commercial Finance for $2 billion. Cooper said in court papers he eschewed earlier lowball offers.
Next year Enron plans to issue new stock to creditors in Portland General Electric and return it to its pre-Enron form as an independent company. Earlier this year Oregon regulators rejected Enron's plan to sell the utility to a Texas private investment firm for $2.35 billion in cash and assumed debt, and negotiations to sell it to the city of Portland later broke down. Enron bought Portland General in 1997 for $3 billion.
Creditors also will receive stock in Prisma Energy International, which comprises the international assets that failed to garner adequate offers from buyers.
In all, Enron has gained nearly $13 billion from asset sales, Cooper said. The company also has gained $735 million from several banks that settled litigation claiming they aided and abetted fraud that could have prevented the company's crash.
"From initial expectations, I think we nearly tripled creditor recoveries," he said.
Cooper asked Gonzalez for his success fee more than a year ago, but the judge made him wait until he considered all final fee and expense requests.
In August, Cooper and the other troubled company he leads, Krispy Kreme Doughnuts Inc., agreed his firm's success fee would be a warrant for 1.2 million shares at $7.75 apiece.