Judge clears Enron Chap 11 plan for vote, but creditors vow fight

New York (Platts)--7Jan2004

After revising its long overdue Chapter 11 reorganization plan four times since its first filing last July, failed energy giant Enron won Bankruptcy Court approval Tuesday to begin collecting votes from creditors, who the company says would get about 20 cts on the dollar.

Federal Bankruptcy Judge Arthur Gonzalez here Tuesday approved Enron's disclosure plan, filed Monday. But stiffening creditor resistance and a mushrooming volume of claims and administrative costs cast new doubts on the ability of Enron CEO Stephen Cooper to push through a peaceful compromise payout plan. Sharp opposition has emerged from major creditors of main trading arm Enron North America, who say they have enough votes to block confirmation and want permission to file their own rival reorganization plan. In its disclosure Monday, Enron showed a surge in creditor claims to nearly $1-trillion, with soaring administrative costs of $330-mil a year that will make Enron's 2001 bankruptcy case at least a $1-bil feeding frenzy for lawyers and other professionals by the end of this year.

In its latest filing, Enron revealed 24,000 creditor claims have been filed against the company and its myriad bankrupt subsidiaries totaling more than $900-bil. That is up from $310-bil on 22,000 claims tallied when Enron filed its first Chapter 11 plan last July, and does not count further tens of billions in un-quantified potential damage claims. Of that $900-bil, Gonzalez has disallowed 5,600 claims totaling $111-bil. Enron has objections pending on another 3,000 claims totaling $618-bil, with $15-bil of other claims already in dispute. Enron plans "additional objections" to a "substantial portion" of the remaining $150- bil or more of claims to get the number down to the $67-bil level on which Enron's payout plan is based. At about $12-bil of remaining assets, mainly cash from asset sales, its Portland General electric utility and the TransWestern natural gas pipeline, Enron hopes to pay out about 20 cts on the dollar overall.