- The Washington Times - Friday, July 11, 2003

HOUSTON — Enron Corp.’s thousands of creditors will get a fraction of what they are owed when the scandal-ridden energy conglomerate emerges from bankruptcy as two newly named pipeline and international power companies.

Enron’s reorganization plan, filed yesterday after five deadline extensions, said most creditors will receive 14.4 cents to 18.3 cents on every dollar owed. The bankruptcy, one of the most expensive in history, has left 20,000 creditors owed an estimated $67 billion.

The plan is subject to approval by the bankruptcy court.

“This is a good day in what has been a very complicated process,” Stephen Cooper, a restructuring expert and Enron’s interim chief executive, said in a statement yesterday.

Enron, No. 7 on the Fortune 500 in 2000, collapsed into bankruptcy December 2001 amid revelations of billions in hidden debt, inflated profits and complicated accounting entries designed to support its facade of robust financial health. Thousands of employees lost their jobs, and stock that once traded as high as $90 per share shrank to pennies.

The expected recovery by lenders to the once high flier falls well short of other bankruptcies. By comparison, bondholders in WorldCom’s bankruptcy are to receive 36 cents on the dollar in the only Chapter 11 case larger than Enron’s.

Bondholders normally rank behind creditors that made collateralized loans — such as large banks — when it comes to grabbing what’s left in a bankruptcy. But in Enron’s case, financial institutions such as J.P. Morgan Chase & Co. and Citigroup Inc. are unsecured creditors like bondholders, so they will receive the same slim payback.

The plan shows anticipated recovery estimates for more than 350 classes of creditors, ranging from 100 percent payment of administrative fees to nothing for common stockholders. The plan covers 174 debtor entities, from Enron to multitudes of subsidiaries.

Enron’s plan, already approved by major creditors, says creditors will divvy up proceeds from asset sales and auctions and receive equity in the two new companies — one domestic, the other international.

The domestic business, CrossCountry Energy Corp., will have Enron’s full or partial interest in three North American natural gas pipelines. The second company, temporarily dubbed InternationalCo., includes 19 international power and pipeline holdings.

If Enron decides to keep Portland General Electric, its Pacific Northwest utility, it would be a third independent company in which creditors also would receive equity. Enron is soliciting bids on the utility.

Enron’s filing comes 18 months after its bankruptcy filing that foreshadowed a string of corporate accounting scandals at major public companies.

Texas Attorney General Greg Abbott, who represents the state in its claim as an Enron creditor, said he hopes the filing of the reorganization plan signals an “end in sight.” Mr. Abbott has been concerned about the case’s slow pace and high costs; administrative and legal fees have exceeded $442 million.

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