|Enron Announces Agreement to Settle Litigation Related to Company Retirement Plans|
July 11, 2005
HOUSTON -- Enron Corp. announced today that it has reached agreements to settle a governmental action and related class action lawsuit currently pending against the company and certain of its former officers, Northern Trust Company and Arthur Anderson. Under the proposed settlement, the United States Department of Labor (DOL) and the class action plaintiffs will have a shared allowed general unsecured claim of $356.25 million and receive distribution pursuant to Enron’s Chapter 11 Plan. Funds above the settlement amount held in reserve by Enron on account of these claims can now be released for distribution to creditors.
The agreement applies to Pamela A. Tittle, et al. v. Enron Corp., et al. (the Tittle Action) and Elaine L. Chao v. Enron Corp., et al. (the DOL Action). The cases were brought on behalf of the DOL and former and current Enron employees who allege certain breaches of fiduciary duty by the company and related parties with respect to the management of Enron’s retirement plans. The cases were consolidated in the U.S. District Court for the Southern District of Texas. issue PGE common stock to creditors in accordance with Enron’s approved bankruptcy plan.
In connection with these settlements, Enron will move forward with a standard termination of these plans, which requires it to fully fund the pension plans, establish an orderly process to distribute the value of benefits from each plan to its participants, and pay all benefits earned under these plans, all in accordance with a process overseen by the Pension Benefit Guaranty Corporation (PBGC). Once those actions have been taken, the PBGC has agreed to withdraw its action to involuntarily terminate Enron’s Cash Balance Plan, as well as the pension plans for Enron subsidiaries Enron Facility Services, Garden State Paper Company and San Juan Gas Company.
“We are extremely pleased to have resolved another issue in the bankruptcy proceedings and removed a significant hurdle in the termination of Enron’s pension plans,” said Stephen Cooper, Enron’s interim CEO and chief restructuring officer. “These settlements remove more than seven billion dollars of claims against the Enron estate and will accelerate distributions to all other creditors.”
Cooper added, “Everyone benefits from a standard termination of the plans – participants win by having their benefits secured or paid under the plans, the PBGC benefits because it is not required to take over and administer the plans, and the estate and its creditors benefit because a standard termination represents the most cost-effective method of terminating the plans.”
The proposed settlement remains subject to approval by the Bankruptcy Court for the Southern District of New York and the U.S. District Court for the Southern District of Texas. Attorneys for the class will address terms for distribution of the settlement fund to class members.
The above settlement is separate and apart from the previously announced settlements involving proceeds from director and officer liability insurers, and those settlements in shareholder actions in the consolidated Newby litigation involving Citibank and J.P.Morgan Chase.