Judge Arthur Gonzalez of the US Bankruptcy Court of the Southern District of New York has ruled that Enron Corp.’s $10 billion lawsuit against Dynegy Inc. will be moved to a Houston federal court, where Judge Melinda Harmon will preside.
"Dynegy appreciates Judge Gonzalez’s careful and reasoned approach to ruling on the change of venue issue. The company believes that moving the proceedings to Houston will provide all parties involved with the most efficient and economical way to resolve this case," Dynegy said in a statement issued shortly after the Apr. 12 ruling.
In a related development, EOTT Energy Partners LP announced finalization of a federal bankruptcy judge’s stipulation and agreed order that permitted EOTT to secure long-term storage and tolling agreements for its Mont Belvieu, Tex., storage facility and oxygenate methyl tertiary butyl ether plant in the Houston Ship Channel area.
EOTT Energy Partners markets and transports crude oil. Although EOTT’s general partner EOTT Energy Corp. is a wholly owned subsidiary of Enron, neither is included in Enron’s bankruptcy proceedings (OGJ, Feb. 4, 2002, p. 31).
Lawsuit background
Both Enron and Dynegy are based in Houston. The bankrupt Enron had wanted to keep the lawsuit in New York. Enron is suing Dynegy over the latter’s Nov. 28 decision to abandon a Nov. 9 agreement to merge with Enron.
The deal was curtailed after credit ratings agencies began downgrading Enron to below an investment-grade ranking. Consequently, Enron filed for Chapter 11 bankruptcy protection on Dec. 2 in a federal court in New York City (OGJ, Jan. 14, 2002, p. 34).
Harmon already is in charge of about 70 shareholder and class action lawsuits involving Enron.
EOTT
The bankruptcy court rejected earlier agreements between EOTT and an Enron subsidiary, Enron Gas Liquids Inc. (EGLI), clearing the way for EOTT to seek other customers for the two facilities.
EOTT had sought court rejection of the contracts so it could develop new customers for the facilities, which it said became necessary as a result of EGLI’s failure to uphold its obligations under the contracts after Enron’s bankruptcy filing.
EOTT Pres. and CEO Dana Gibbs said, "We are now able to pursue long-term contracts for these facilities, enhance earnings and cash flow, and manage our business in a way that best serves our customers, our suppliers and our unitholders."
