My Newz 'n Ideas

It is my intent to express my opinion and to discuss current events. Feel free to make suggestions to fields you would like to see covered, and I will consider them. Please leave your name with comments. Thank you. Arabic: عربي.

Tuesday, July 12, 2005

Enron employees to recover some 401K money

Enron has agreed to pay millions to the employees in a suit by the government. They settled on $356.25 million the U.S. Labor Department said on Monday.

However, the company is has come out of Chapter 11 and went into Chapter 7. The difference is Chapter 11 tries to have the court help you to get the business back on it's feet, while a Chapter 7 liquidates all assets.

Because Enron has more debt than it does assets, the employees will not receive 100 cents on the dollar, but they will receive something.
"This agreement makes possible a significant recovery for Enron retirees and their families," Labor Secretary Elaine Chao said in a statement.

Also signing onto the settlement were a committee of Enron creditors and State Street Bank and Trust of Boston, which was hired to oversee Enron's retirement plans after the company's collapse, the department official said. [read more]

There has also been a payment of $86.85 million by other participants in the mismanagement of the company. This was for private plaintiffs who sued last year and settled.

A key victory for the employees is that they will not be treated as other creditors who will all have to settle for the same percentage of what is left of the assets.

Kenneth Lay and Jeffrey Skilling still face criminal charges in 2006. This in no way relieves them of that. It is just nice to see that the employees will not be left penniless.