Other Citigroup Litigation

The Citigroup MegaClaims litigation reaches beyond just Citigroup and Enron Creditors Recovery Corp. ("ECRC").  As a result, there are additional parties to the litigation, including those who hold credit linked notes (CLN) and others, such as Springfield Associates, who now hold claims that belonged to Citigroup at the time Enron filed for bankruptcy.  

The CLN litigation centers around the status of claims transferred after the date of the bankruptcy filing in situations where the transferor (Citigroup, in this case) allegedly participated in bad acts, or fraudulent conduct, which contributed to the financial demise that led to the bankruptcy.

ECRC argues that the claims should be subject to equitable subordination or disallowance because to hold otherwise would allow an entity that engages in wrongful conduct (as ECRC alleges Citigroup has done) to “wash” a claim by simply transferring it to a third party.  Such claim washing, if successful, would legitimize such a maneuver, transforming a tainted claim into one having the same validity and priority as claims held by innocent creditors.

The CLNs have already filed suit against Citigroup seeking to hold Citigroup responsible if ECRC is successful in subordinating or having disallowed the CLN’s claims. The CLNs, Springfield and Westpac allege in separate lawsuits against Citigroup that, due to its conduct, Citigroup should be financially responsible to them for any amounts they do not recover from the Enron bankruptcy estate on the claims Citigroup assigned them.

To view the filings related to the litigation, please click on the following links:

CLNs case against Citibank

ECRC's case against Westpac and Springfield

Westpac’s cases against Citibank

Springfield’s case against Citibank

Additionally, summaries of the Springfield litigation and Westpac litigation are available for your review in the press room section of this website.

 At the time of Enron’s bankruptcy, Citigroup held billions of dollars of face value claims related to its financial dealings with Enron.  After Enron filed its bankruptcy petition on December 2, 2001, Citigroup transferred a number of claims to other parties. At issue is whether ECRC should have to pay holders of the CLNs in the same manner as “innocent” creditors, or whether these claims are subject to equitable subordination or disallowance.