Enron Creditors Will Get Pennies

Enron Corp.'s thousands of creditors will get next to nothing when the scandal-ridden company emerges from bankruptcy as two companies with new names.

The energy company's much-anticipated reorganization plan, filed early Friday after five deadline extensions, said most creditors will receive 14.4 cents to 18.3 cents on every dollar they are owed. The bankruptcy, one of the most expensive in history, has 20,000 creditors owed an estimated $67 billion.

By comparison, bondholders in WorldCom's bankruptcy are to receive 36 cents on the dollar in the only Chapter 11 case larger than Enron's.

Bondholders normally must wait behind creditors that collateralized loans, such as large banks, when it comes to grabbing what's left in a bankruptcy. But in Enron's case, financial institutions such as J.P. Morgan Chase & Co. and Citigroup Inc. are unsecured creditors like bondholders, so they will receive the same slim payback.

The rest of Enron's plan, already approved by major creditors, says creditors will divvy up proceeds from asset sales and auctions and receive equity in the two new companies — one domestic, the other international.

The domestic business, CrossCountry Energy Corp., will have Enron's all or part interest in three North American natural gas pipelines. The second company, temporarily dubbed "InternationalCo.", includes 19 international power and pipeline holdings.

If Enron decides to keep Portland General Electric, its Pacific Northwest utility, it would be a third independent company in which creditors also would receive equity. Enron is soliciting bids on the utility.