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Release Date: February 16, 2006
Release Number: 06-232-NAT
Contact Name: David James/Gloria Della
Phone Number: 202.693.4676/202.693.8664
Washington, DC - U.S. Secretary of Labor
Elaine L. Chao today announced that workers and retirees of Enron will
receive $133.95 million in cash to be distributed through the
company’s retirement plans. $124.6 million of the cash represents
proceeds of the sale of the Enron Corp. bankruptcy claim to Bear Stearns
Investment Products Inc., New York, N.Y and $9.33 million was paid
separately by Enron earlier this month as a distribution for part of the
bankruptcy claim.
“The collapse of Enron was devastating to thousands
of employees and retirees whose long-term savings and retirement
security were tied up in the company,” Secretary of Labor Elaine L.
Chao said. “This agreement secures $134 million in cash which will be
distributed to workers and retirees through their retirement plans. The
Department will not rest until we have done everything we can to help
employees and retirees recover what they are owed.”
On June 26, 2003, the department sued Enron, its
board of directors, Kenneth L. Lay, Jeffrey K. Skilling, the Enron
officers and the plans’ administrative committees for mismanagement of
the plans, in violation of the Employee Retirement Income Security Act.
The defendants allegedly failed to consider the prudence of Enron stock
as an appropriate investment for the retirement plans and did nothing to
protect the workers and retirees from extensive losses. The suit also
alleged that the board of directors failed to appoint and monitor a
trustee to oversee the employee stock ownership plan. Lay also allegedly
misrepresented Enron’s financial condition to employees and plan
officials and encouraged them to buy the stock.
The bankruptcy claim is the result of a September
2005 settlement between Enron, the department, the retirement plans and
private plaintiffs in the bankruptcy case. The sale of the bankruptcy
claim increases the cash available for distribution to participants in
Enron’s retirement plans. The Labor Department previously announced an
$86.85 million settlement with Enron officers and fiduciaries who served
on the plans' administrative committee. Appeals are still pending in
connection with that settlement. Subject to resolution of the appeals,
the sale of the bankruptcy claim increases the total amount paid in this
case for the Enron retirement plans to more than $220.8 million, subject
to attorneys’ fees and expenses. It also converts an illiquid claim in
the bankruptcy court to cash assets which can readily be distributed to
Enron plan participants.
The agreement resolves the Labor Department’s
lawsuit and a private class action suit brought on behalf of the
plans’ participants. The agreement does not resolve the department’s
claims against Lay and Skilling.
The final agreement was approved by the Bankruptcy
Court for the Southern District of New York. The Labor Department’s
lawsuit resulted from a comprehensive investigation conducted by the
Dallas regional office of the department’s Employee Benefits Security
Administration and the Office of the Solicitor.
(Chao v.Enron)
Civil Action No. H-03-2257/Consolidated with H-01-3913)
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