Secretary of Labor Elaine L. Chao Announces $134 Million to be Distributed to Enron Workers and Retirees

Archived News Release — Caution: Information may be out of date.

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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Archived News Release — Caution: Information may be out of date.

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