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Enron Tries to Block Pension Takeover Bid

The Associated Press

WASHINGTON Aug. 5, 2004 — Enron Corp. has asked the court overseeing its bankruptcy case to block the federal Pension Benefit Guaranty Corp.'s efforts to take over four of the energy giant's retirement plans.

In court papers filed Wednesday, Enron accused the federal agency of frustrating its reorganization efforts and usurping the bankruptcy court's authority to consider claims against the company.

"Through its 'forum shopping,' the PBGC is attempting to accomplish in the U.S. District Court for the Southern District of Texas what it could not accomplish in the bankruptcy court," Enron said.

The PBGC's objection to Enron's reorganization plan was overruled by the bankruptcy court, and the plan was confirmed on July 15.

The PBGC is one of a handful of parties that has appealed the confirmation order. At the same time, the PBGC, which protects private-sector pensions, is trying to proceed with the action it filed June 3 in the federal court in Houston not in the U.S. Bankruptcy Court in Manhattan where the company's Chapter 11 case is underway to terminate the four underfunded pension plans.

By pursuing the termination action, Enron said the PBGC is trying to elevate its claims, which haven't even been resolved, above those of similarly situated creditors and avoid treatment under the plan.

Enron, in a lawsuit filed Wednesday against the PBGC, is asking the bankruptcy court to rule that the agency's termination action violates the automatic stay provision of the Bankruptcy Code.

The automatic stay provision blocks parties from filing or pursuing a lawsuit against a debtor company on account of a claim that arose prior to the company's filing for Chapter 11 protection.

The PBGC has asserted claims against Enron totaling $321.8 million for the four pension plans and another pension plan, the Portland General Electric Co. plan, which isn't subject to the agency's termination action. Portland General, an affiliate of Enron, isn't part of the bankruptcy proceedings.

As long as the agency's claims remain unresolved, Enron is required to reserve for the full amount of the claims.

If the PBGC claims are disallowed or reduced, then the amount Enron must pay to terminate the four pension plans may be significantly less than the amount sought by the PBGC in its termination action.

The bankruptcy court must determine the amount of the PBGC claims before the termination action can be resolved, Enron said. It is thus necessary and appropriate, the company said, for the bankruptcy court to block the PBGC from pursuing the termination action in the federal court in Houston.

In a separate filing Wednesday, Enron asked the bankruptcy court to issue preliminary and permanent injunctions restraining the PBGC from proceeding with its action.

The four plans at issue have roughly 17,000 participants and include the Enron Corp. Cash Balance Plan, Garden State Paper Pension Plan, Enron Financial Services Pension Plan, and San Juan Gas Co. Pension Plan.


 

 

 

 

 

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