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Enron creditors file objections to proposed plan
By Jeff Pines
Washington, March 25 - Enron Corp.'s proposed reorganization plan faces a mountain of objections from the company's creditors.
In a pile of March 24 filings with the U.S. Bankruptcy Court for the Southern District of New York, creditors said the plan was unconfirmable - and at least one claimed the case is illegal.
Among those who filed objections are: Canadian Imperial Bank of Commerce, the Royal Bank of Scotland and National Westminster Bank plc, Citibank NA, Appaloosa Management LP and Angelo Gordon & Co. LP, the ad hoc committee of Yosemite/CLN noteholders, JPMorgan Chase Bank and a host of utility companies.
The briefs argue that Enron's plan does not treat claims within the same class equally, that it improperly classifies some claims and it fails the best interest of creditors' test.
For example, Royal Bank of Scotland and National Westminster Bank said the proposed compromise among Enron, the Enron North America Corp. examiner and the creditor's committee has no legal foundation because it treats the debts as if they were 30% consolidated with all of Enron's debts and 70% as if they were not.
Another problem with the proposed plan is that it favors Enron North America's out-of-the-money equity interest holders at the expense of the company's creditors, according to Appaloosa Management and Angelo Gordon.
JPMorgan Chase said the plan is illegal because it "effectuates a fraudulent transfer" by transferring the value of Enron Leasing Partners, which is not in Chapter 11, to Enron without first paying the claims against Enron Leasing Partners first.
An April 20 hearing is scheduled to consider confirmation of the plan.
Enron filed for protection under Chapter 11 on Dec. 2, 2001. Since then a number of its executives have been indicted for cooking the company's books and other grounds.
The company's Chapter 11 case number is 01-16034.
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