Enron Corp. filed a 900-page reorganization plan that outlines how it proposes to pay a fraction of the $67 billion that the company estimates in creditors' claims.
The former natural gas and trading giant filed for Chapter 11 bankruptcy protection on Dec. 2, 2001, in a federal court in New York City (OGJ, Jan. 14, 2002, p. 34). At that time, it was the largest US bankruptcy filing. WorldCom has since taken that distinction.
The multibillion-dollar total is Enron's working estimate of third-party claims. Company officials said the total dollar volume of all pending claims is worth substantially more than that.
Enron has no final recovery estimate, spokesman Mark Palmer said. Recovery rates will vary from 100% for certain claims to nothing for others.
A preliminary estimated recovery rate for creditors is 14.4-18.3¢ on the dollar.
The company said it hopes for a confirmation hearing this fall with court approval coming before Dec. 31.
Judge Arthur Gonzalez of the US Bankruptcy Court of the Southern District of New York must approve the reorganization plan. First, he is expected to hold a hearing on Enron's disclosure statement to determine if creditors have enough information to make an informed decision.
Stephen F. Cooper, Enron's acting CEO and chief restructuring officer, said, "Having reached agreement with a broad base of our economic stakeholders, we can expedite this process and hopefully avoid lengthy bankruptcy maneuvering and the associated legal expenses."
During a July 11 conference call with reporters, Cooper said that a "tremendous amount of time" was spent building consensus between Enron's Unsecured Creditors' Committee and the Enron North American Examiner. The reorganization plan jointly was agreed upon by those two entities.
"We are distributing 100% of Enron's economic value at the end of the day. . .so I am hopeful that opposition will be at a minimum," Cooper said.
Three debtors represent more than 75% of Enron's unsecured claims: Enron Corp., Enron North America, and Enron Power Marketing Inc. The estimated recoveries for unsecured claims against those debtors are Enron Corp. 14.4%, Enron North America 18.3%, and Enron Power Marketing 21.3%.
The Enron Employment Related Issues Committee released a statement saying that it is reviewing the plan to determine whether Enron had treated employees, former employees, and retirees fairly and with the same rights as other unsecured creditors.
The plan must be approved by 50% of the creditors and holders of two thirds of the dollar amount of claims for each creditor class in all debtor entities. The plan includes several previously announced elements, including the sale of Northern Natural Gas Pipeline unit to Houston-based Dynegy Inc. (OGJ, Jan. 14, 2002, p. 34).
Last month, Enron created CrossCountry Energy Corp., a holding company for Enron's interests in Transwestern Pipeline Co., Citrus Corp., and Northern Plains Natural Gas Co.
Enron also announced plans in May to create a new international energy company, which will be called Prisma Energy International Inc. and will comprise the majority of Enron's international energy infrastructure businesses. Both companies will be separate businesses with independent boards of directors.
Meanwhile, Enron is in the process of determining whether to sell Portland General Electric or to distribute stock of PGE to Enron's creditors.
