Enron plan opposed by investors because of uncertainty over $3.3 billion of claims

New York, Jan. 1 - Enron Corp.'s disclosure statement for its plan of reorganization has drawn opposition from a group of investors who claim it does not adequately explain how $3.3 billion of claims under the Zephyrus and Choctaw transactions will be treated.

The objection was filed by Bear, Stearns & Co. Inc., Farallon Capital Management LLC and King Street Capital LP and King Street Capital Ltd.

The investors hold claims related to Enron North America Corp.'s Zephyrus and Choctaw structured finance transactions, which were guaranteed by Enron Corp.

In their filing with the U.S. Bankruptcy Court for the Southern District of New York, the investors noted that Enron has challenged the guarantees but has not begun any litigation to challenge the claims against Enron North America under the two transactions except where holders of the claim are being sued because of their participation in other transactions.

In other words, there is no indication that the Choctaw and Zephyrus claims will be disallowed.

But Enron says in the reorganization plan and disclosure statement that it reserves the right to challenge the claims for up to 20 days after the plan is confirmed, the investors said.

As a result, the investors say the disclosure statement is inadequate because it does not contain sufficient information for holders of these claims to determine what treatment they will receive.

They also noted that the $3.3 billion makes up roughly 25% of the claims against Enron North America.

A hearing to approve the disclosure statement has been set for Jan. 6.

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