Judge Overrules DoL, State Street Agreement on Enron

April 3, 2002 (PLANSPONSOR.com) - State Street Bank and Trust Company wants to reconsider its agreement with Enron to assume oversight of the company's three pension plans, in light of a recent court ruling.

The bank’s move follows a ruling by Judge Arthur Gonzalez of the US Bankruptcy Court in New York that the costs of overseeing the plans should be paid by the Enron plans, not from assets of the company, according to Dow Jones. 

Creditor Concurrence

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The original agreement between the Labor Department, Enron and State Street called for the company to pay the new trustee’s fees for up to three years to a maximum of $1.5 million per year plus expenses.

Instead, the judge supported a group of Enron’s creditors who think the pension plans should bear the service costs directly. Those creditors, whose claims would be impacted by fees set aside from Enron corporate assets, argue that the State Street contract was too expensive – and that opening company assets to this type claim would ‘open the floodgate’ for other claimants.

Enron sponsors a 401(k) savings plan, a cash balance defined benefit plan, and an employee stock ownership plan covering over 20,000 employees.