BUSINESS: The Wrath of Enron

As of July 16th, 2004 the company that will be formerly named Enron, will be operating under a court approved Chapter 11 plan as two separate entities. After revealing that the failing company was worth only about half of the claimed 63 billion dollars in 2001, and selling much of their assets under court protection, the company will be allowed to re-surface.

Part II of this saga begins with the numbers...

Creditors will be settled with approximately 14.4 to 18.3 cents on the dollar.
Shareholders will receive $ zero for their investments.
Accountants, lawyers and other professionals will receive $702 Million in fee's and services.

It is apparent who the winner's are in this troubled company's demise.

www.washingtonpost.com (free subscription required)
Claims against the company will amount to nearly $63 billion, according to Stephen F. Cooper, a turnaround expert serving as acting chief executive, while Enron has on hand about $12 billion in cash and equity in its Prisma Energy International Inc. unit. Enron did not set a time frame for when payments to creditors would come because there are still tax and legal issues to be ironed out.

As part of the reorganization, Enron's name will disappear, along with its now infamous "crooked E" logo. But Cooper said the bankrupt company's estate will proceed with lawsuits against investment banks and former executives accused of playing a role in the firm's demise. Any financial settlements those cases might generate would be shunted to creditors.

Meanwhile, other industries continue to suffer from the effects of Enron's downfall. Citigroup Inc. said yesterday that its net income for the second quarter fell 73 percent after taking a $4.95 billion charge against earnings for lawsuits related to its dealings with Enron and WorldCom Inc.

Please visit the link provided for the complete story.

It is a real shame that the only persons who were able to 'recover' any funds or investments from this, will be the lawyers and bankruptcy service provider's. The bankruptcy examiner company themselves, will receive about $90 million for their services. The shareholder's took the largest load of the whole corporate scandal with returns of nothing for their efforts and trust in their investments.

Related News Links:
www.bizjournals.com
www.detnews.com
www.cnn.com
www.enron.com

[edit on 16-7-2004 by smirkley]

[edit on 7-16-2004 by Valhall]

BUSINESS: The Wrath of Enron - Part II