Enron Shifts Gears On Trustee Fees
That motion was something of a turnaround from just two months ago when Enron lawyers complained to US Bankruptcy Judge Arthur Gonzalez that the company did not want to be “taxed” by the roughly $1.5 million annual fee for State Street Bank and Trust to oversee its three retirement programs (see Enron Balks at State Street Fees ).
Judge Arthur Gonzalez of the US Bankruptcy Court in New York had ruled that Enron should pay the costs of overseeing the plans, rather than the plan (see Judge Overrules DOL, State Street Agreement on Enron ). Creditors of the embattled energy trader had opposed payment of the fees from the firm’s coffers.
The Department of Labor had chosen State Street to oversee the Enron plans last March (see State Street Gets Nod for Enron Plans ). That move came in the wake of the DOL’s decision to replace members of the Enron Corporation Administrative Committee with an independent trustee (see DOL Taps Enron Fiduciary Replacements ).
But last week, Enron’s lead bankruptcy lawyer told the court, “We’re hardly in a position to ask our employees to pay for it,” according to Reuters. He also noted that asking workers to pick up the tab threatens to increase Enron’s employee attrition rate – a trend that he argued the court had attempted to slow by its mid-April approval of Enron’s request for a $140 million employee retention plan.
At that time, Enron said workers were quitting at a rate that could cost the beleaguered company nearly nine out of every 10 employees by year’s end, further diminishing the prospects for creditor recoveries.
Enron’s official committee for unsecured creditors has filed a discovery motion with Judge Arthur Gonzalez, seeking demonstration by Enron of a business justification for paying for State Street’s services.
MORE on the Enron saga and related events on our exclusive Company Stock Issues Page
See Also Blackout Blueprint
« SURVEY SAYS: March Madness