Enron and a group of former employees may pursue the return of $53 million
in accelerated deferred compensation paid by the company shortly before its
bankruptcy filing, a U.S. bankruptcy judge ruled Monday.
For a Limited Time receive a
FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with
customized information for your industry, location, and job.
Get Your Report Now!According to the Houston Chronicle, 114 current and former Enron executives
had been allowed to make withdrawals from their deferred-compensation accounts
in the 30 days before Enron sought bankruptcy protection.
New York U.S. Bankruptcy Court Judge Arthur Gonzalez approved a settlement
reached by Enron's current management, the unsecured creditors' committee, and
the employee committee over the issue, lawyers for the employees told the Associated
Press.
"Simply put: this is the right decision," said Ronald R. Sussman
of Kronish Lieb Weiner & Hellman, the New York firm representing the employee
committee. "The payments made to a select few individuals, when Enron was
insolvent, were preferential, improper and in violation of the Bankruptcy Code.
These monies should be returned to unsecured creditors, which include former
employees and retirees."
Enron and other former employees have sent letters to the recipients of the
deferred compensation, demanding the return of between 40 and 90 percent of
the money. The Chronicle reports that those who remained with the company will
be asked to repay less because they are perceived to have provided a post-bankruptcy
benefit to Enron's creditors.
The will have until Oct. 31 to agree to the terms of the settlement with Enron
and the former employee committee. If they choose not to pay, they will be subject
to litigation by the employee committee for payment in full, plus legal fees.
The Chronicle gives this breakdown of the proposed settlement:
- Those who received payments who are still working at Enron must return 40
percent of the money they received.
- Those who were laid off by Enron in the last 20 months must repay between
40 percent and 85 percent of the money, based on how long they remained after
bankruptcy.
- Those who left Enron voluntarily or were fired for performance reasons,
must repay 90 percent.
Several employees in the third group had challenged the sliding scale Monday.
They said whether an employee was terminated or quit should make no difference
in the value of their service to Enron.
Links