Enron creditors snubbed in reorganisation plan
Enron creditors are to receive only one fifth of the sums they are owed, according to a reorganisation plan filed on Friday at the US bankruptcy court.
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The bankrupt energy giant, which had debts of more than $67bn, said most creditors would receive between 14 cents and 18 cents for each dollar they were owed. The two largest creditors groups, which make up 78% of the total claims, are Enron North America and Enron Corp, the collapsed company’s parent.
A minority of creditors with priority claims will receive full payment but the reimbursement could take up to 6 years. But common shareholders will receive nothing and the banks which lent money to Enron will also be out of pocket.
Enron, whose spectacular collapse also saw the demise of its auditor Andersen, will pay the creditors $5bn in cash which it raised from the sale of its Houston offices, its art collection, a wind turbine business and commodity contracts sold before the company’s bankruptcy filing.
The bankruptcy plan is still subject to creditor approval. But the nine-month bankruptcy is believed to have already cost about £500m in fees, making all sides anxious for a quick resolution of the case.