Tuesday, June 25, 2002
Enron workers to receive extra $29 million in severance
By BRAD FOSS
AP Business Writer
NEW YORK — Workers laid off by Enron Corp. will get additional severance money after a bankruptcy judge ruled they were eligible for more money.
The 4,200 workers stand gain an additional $29 million because of the ruling.
The former employees are eligible to receive even more, according to the terms of the ruling made Monday by Judge Arthur J. Gonzalez. Lawyers for the laid-off workers hope to recover tens of millions of dollars in bonuses that Enron paid to top employees to prevent them from leaving the crumbling energy company in the 90 days preceding its Chapter 11 bankruptcy filing.
The ruling comes after several months of negotiations between Enron's lawyers and those representing the laid-off workers. The former employees originally had been seeking an additional $68 million, or a maximum of $30,000 per employee, while lawyers for Enron claimed the company's severance policy legally terminated on the day it filed for bankruptcy. Had the severance policy been paid in full to the 4,200 workers, lawyers estimate it would have amounted to nearly $150 million. The final hearing is scheduled for Aug. 12.
The severance agreement is voluntary and give former employees the option of opting out and suing the company on their own.
A lawyer for the former employees discouraged them from opting out. “There's a substantial amount of money here,” said Lowell Peterson, who was involved in the negotiations.
The former workers have already received severance payments totaling $29 million, or $5,678 each. Under the terms of Monday's agreement, they will be paid up to $13,500 each, depending on their salary, years of employment and other factors.
But the former workers stand to share potentially millions more as the official committee of Enron's creditors tries to recover payments Enron made to key employees in the months leading up to its collapse, including the tens of millions of dollars that were paid out as retention bonuses.
Federal law prohibits “preferential payments” in the 90 days leading up to a bankruptcy filing.
Last week, shareholders and former employees were outraged to learn that Enron's top 144 workers received $744 million in payments and stock in the 12 months leading up to its bankruptcy filing. Figuring out when the payments were made will be crucial for lawyers seeking to recover a portion of these funds.
Enron filed for Chapter 11 bankruptcy protection on Dec. 2, following revelations of questionable accounting practices that let Enron hide billions in debt through the use of off-the-books partnerships.
Three Tristate businesses in top 100
Diagnosis: Take it to dealer
No. 2 airline asks for federal help
Mineta: Amtrak shutdown avoidable
Dynegy announces plan to shore up finances
Enron workers to receive extra $29 million in severance
Global Crossing confirms 'isolated' shredding of documents
Jury awards research hospital $200 million in punitive damages
Microsoft discloses ambitious new security effort
Business Digest
Morning Memo
Tristate Summary
What's the Buzz?
