Administration November 9, 2004

Enron Judge Oks Recouping $53M in Deferred Comp Payments

September 23, 2003 (PLANSPONSOR.com) - A committee of former Enron Corp. workers has received the high sign from a US Bankruptcy Judge to go after $53 million in deferred compensation payments made to executives a month before Enron's 2001 bankruptcy.

Reported by

Fred Schneyer

But the approval from US Bankruptcy Judge Arthur Gonzalez wasn’t a direct victory for the employees since any money recovered from the 162 executives would get doled out to Enron’s Chapter 11 creditors and not paid to the workers, according to Dow Jones.

The employee committee argues that the payments were inappropriate since they came a matter of weeks before the company sought bankruptcy protection. That meant that the executives were effectively given preference over other potential creditors; such preferential payments can’t be made during the 90 days prior to a bankruptcy filing.

These executives got 100% of the money Enron owed them, while most of Enron’s other creditors, who are owed more than $60 billion combined, recovered, at best, less than 20%.

Any of these 162 Enron executives can avoid returning their money if they prove doing so would be too much of a financial burden. Enron believes it can recover between $30 million to $40 million of the $53 million figure, said Kathy Hershcopf, an employee committee attorney.

The top executives under scrutiny for their roles in the accounting scandal that drove Enron into bankruptcy aren’t among the 162 executives who tapped into the deferred compensation pool.