- The Washington Times - Friday, January 25, 2002

HOUSTON (AP) Whoever succeeds Kenneth Lay as Enron Corp.'s chief executive could walk into a minefield. Or he could emerge as a hero who saves the fallen energy giant.
"If you are a restructuring specialist, like someone who deals with problem companies, it presents an opportunity to show your mettle," said Henry T.C. Hu, a corporate law professor at the University of Texas. "On the other hand, you don't know what other bad things are out there yet. There's a risk involved."
Mr. Lay resigned as chairman and chief executive Wednesday, saying the multitude of lawsuits and investigations into Enron's spectacular collapse in an accounting scandal is preventing him from properly running the company.
Enron said it will search for a restructuring specialist to serve as interim chief executive and help the company survive the biggest bankruptcy in history.
"They're going to need someone with a specialization in these situations that can devote 100 percent of his time to business matters of the company," said Mike Greenberger, a law professor at the University of Maryland. "It's impossible to deal with Congress and the Justice Department and try to resuscitate a company at the same time."
Mr. Lay, 59, will remain on Enron's board. Company spokesman Vance Meyer said Mr. Lay will not receive a severance package.
Mr. Lay was chairman and CEO for almost all of the 16 years since the company was created from a 1985 merger of two natural gas pipeline companies.
In that time, Enron grew from a mildly profitable business into the world's largest energy marketer. It diversified its trading to include pulp, paper and bandwidth, among other commodities.
Enron reached No. 7 on the Fortune 500 list and earned hundreds of millions of dollars in reported profits while concocting financial partnerships that allowed the company to keep half a billion dollars in debt off its books.
Last year, the accounting practice was exposed, and Enron's stock slid to less than a dollar from about $80. The company filed for Chapter 11 bankruptcy protection on Dec. 2, and thousands of Enron employees lost their jobs, as well as much of their life savings, since their 401(k) accounts were loaded with company stock.
Congress, the Justice Department, the Securities and Exchange Commission, the Labor Department and others are investigating. Mr. Lay and the company face numerous lawsuits and increasing criticism from employees, shareholders and politicians demanding answers as to how Enron could implode so spectacularly.
William Brandt Jr., president and chief executive of Development Specialists, a Chicago firm that helps distressed businesses rebound, said Enron's next CEO could be a trustee appointed by the judge overseeing the bankruptcy in New York.
A trustee would answer to the judge rather than Enron's board or its creditors, Mr. Brandt said. A showing of fraud, mismanagement or incompetence of previous management traditionally supports the appointment of a trustee.
Mr. Hu said that if Enron ends up appointing a CEO, it must be someone who inspires confidence without expecting the typical perks of top executives, such as stock options.
The lure would be the reputation boost that would come from saving a company from such a huge, controversial downfall, he said.
"There's a lot more laughter and mirth when you're an obstetrician rather than when you're a coroner," Mr. Hu said. "And here, you're a coroner. It's an enormously difficult task. And everybody's looking over your shoulder."


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