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Enron settles with first MegaClaims litigant Royal Bank of Scotland
By Caroline Salls
Pittsburgh, June 17 - Enron Corp. announced it reached an agreement with The Royal Bank of Scotland plc to settle the bank's portion of the MegaClaims litigation, according to an Enron news release.
According to the terms of the agreement, RBS will pay Enron $41.8 million in cash.
In addition, the bank will subordinate or assign to Enron about $329 million of claims filed in the Enron bankruptcy in return for a $20 million cash payment from the estate.
"The terms of this settlement are commensurate with the modest role we believe RBS played relative to others involved in this case," Stephen Cooper, Enron's interim chief executive officer and chief restructuring officer, said in the release.
RBS is the first of 10 financial institutions named as defendants in the suit to settle with the Enron estate.
Other financial institutions involved in the MegaClaims litigation include Barclays plc, Canadian Imperial Bank of Commerce, Citigroup Inc., Credit Suisse First Boston Inc., Deutsche Bank AG, J.P. Morgan Chase & Co., Merrill Lynch & Co. Inc., Royal Bank of Canada and The Toronto-Dominion Bank.
The complaint includes claims that the banks aided and abetted breaches of fiduciary duties, aided and abetted fraud and engaged in civil conspiracy.
The suit also includes bankruptcy-based claims relating to equitable subordination, preferential and/or fraudulent transfers and the re-characterization of some transactions.
The agreement with RBS is subject to the approval of the U.S. Bankruptcy Court for the Southern District of New York, which has jurisdiction over the MegaClaims litigation.
Enron, a Houston-based energy company, emerged from bankruptcy on Nov. 18, 2004.
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