The case highlights the potential risks of unsecured deferred compensation programs embraced by employers as an alternative to retirement savings programs such as 401(k)s which are frequently capped by non-discrimination requirements and benefit limitations for more highly compensated workers.
The Enron executives have managed to wangle one of the 15 seats on the unsecured creditors’ committee, the group that represents Enron’s biggest unsecured creditors. Representing the interests of those executives is Michael P. Moran, 52, a retired Enron attorney who represents a growing group of more than 100 former Enron employees.
In actuality, the executive group may win only a fraction of what they are owed. However, they will still likely fare better than company stock holders, including those in the 401(k) – who fall behind creditors in dividing the assets of bankrupt companies.
The creditors committee was formed on December 12 and is composed mostly of creditor banks like J.P. Morgan Chase and bondholders like Oaktree Capital Management. The U.S. trustee of the bankruptcy court formed the committee to negotiate with Enron during its bankruptcy.
Enron?s stock peaked at $90.56 a share just 16 months ago but closed at 60 cents/share Friday.
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