A federal judge on Thursday approved Enron Corp's plan to reorganise its debts, paving the way for the failed energy trading giant to emerge from bankruptcy protection before the end of this year.
More than 2-1/2 years after the Houston company collapsed amid questions about its financial reporting, US Bankruptcy Judge Arthur Gonzalez confirmed the plan as expected. The majority of Enron's creditors had signed off on the plan in recent months.
"People have been waiting a long time for this to be over. (The confirmation) gives them a little closure and lets them see what's left of the company." said Nancy Rapoport, a dean and professor at University of Houston Law Center.
Under the judge's ruling, the plan will become effective by the end of the year. However no firm date was set. Enron Chief Executive Stephen Cooper in a statement said several tax and change-of-control issues need to be resolved before creditors can begin receiving proceeds under the plan. The company intends to resolve these issues "as expeditiously as possible," he said.
When it completes negotiations with its creditors, Cooper expects Enron to face $63 billion in claims, against which $12 billion in cash and equity assets will be distributed - an overall recovery rate of about 19 percent.
Enron creditors would receive about 92 percent of their recoveries in cash and 8 percent as equity in certain assets.
The company calculated that creditors to its largest units, such as Enron North America, would get about 18 cents to 22 cents on the dollar.
Yet the Enron that emerges from court will be a mere shadow of its former self. Its crown jewel US pipeline assets, repackaged as CrossCountry Energy Corp, and its Oregon utility Portland General Electric will be acquired in coming months for a combined $4.7 billion in cash and assume debt.
Meanwhile the energy-trading business it once dominated is now controlled by better-capitalised Wall Street firms. Enron even vacated its soaring glass towers in downtown Houston for cheaper digs.