U.S. Bankruptcy Judge Arthur Gonzalez has approved Enron Corp.’s plan that would enable it to emerge from the second-largest bankruptcy in U.S. history.
Although creditors are owed more than $74 billion, the company said it expects to negotiate that amount down to about $63 billion and pay approximately $12 billion — about 19 cents on the dollar — according to Bloomberg.
Under the plan, creditors owed more than $74 billion will receive around 20 cents on the dollar from Enron’s remaining assets, according to Bloomberg.
Enron intends to sell most of its remaining assets, noted the wire service, and begin paying creditors in early 2005.
Bloomberg noted that large creditors such as Citigroup Inc. and J.P. Morgan Chase will receive more than $7.4 billion in cash. Creditors will also receive stock in remaining businesses, valued at $3.7 billion, and proceeds that the company receives from lawsuits filed against former banks, law firms, and other business partners, the wire service reported.
Among the creditors that opposed the plan, added Bloomberg, are the San Francisco Giants baseball team, the Oregon Department of Justice, and Citigroup, Enron’s largest creditor.
The plan will become effective by the end of the year, according to Reuters, but “there is no firm effective date” set in the ruling, said an Enron spokeswoman. “There are certain tax issues and change of control issues that need to be resolved before it can go effective,” she added.