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In a significant win for Miami bankruptcy attorney Scott L. Baena and former Enron employees, U.S. Trustee Carolyn Schwartz agreed last week to establish a second creditors committee entirely composed of ex-Enron employees in the Enron Corp. bankruptcy proceedings in New York. Baena, a partner at Bilzin Sumberg Dunn Baena Price & Axelrod who is representing former employees, says he’s submitting the names of potential panel members to Schwartz as she prepares to appoint a second committee. “She says the committee will be appointed very soon,” Baena says. “I would like to think that will be this week or next.” Separately, in Houston, U.S. District Judge Melinda Harmon on Feb. 15 passed over the Florida state employees pension fund and named the Regents of the University of California as lead plaintiff in the shareholders’ class action lawsuit. The Florida fund, which holds nearly $100 billion in assets and is overseen by the State Board of Administration, lost $325 million in the Enron debacle. It had sought the lead role as plaintiff. On Feb. 14, Baena, who represents the largest former Enron employee group, the Severed Enron Employee Coalition, received a faxed letter from Schwartz, who confirmed she would establish a creditors committee of former Enron employees. “We had been cautiously optimistic,” Baena says. “But we were delighted when we received the news that she agrees with our position.” In a brief written statement, the U.S. Trustee’s office said: “Issues relevant to her decision include the facts that there are more than 20,000 participants in the debtor’s employee benefit plan, and that many lawsuits relating to the debtor’s 401(k) plan have been filed.” Following the Dec. 2 bankruptcy filing by Enron, the largest in U.S. history, Schwartz appointed a 15-member creditors committee. But the panel is dominated by banks, bondholders and insurance companies, and has only one former Enron employee. That person, Michael Patrick Moran, had served as in-house counsel at Enron. His appointment was criticized on the grounds that he is unrepresentative of most ex-Enron workers. On Jan. 21, Baena wrote to Schwartz asking that a second, all-employee creditors committee be established so that worker interests could be better represented. “The former employees are the largest constituency of shareholders affected by Enron misconduct,” said Baena, who noted that “billions” of dollars are at stake. Schwartz did not immediately respond to Baena’s overtures on behalf of the coalition. So on Jan. 29, Baena filed a motion with U.S. Bankruptcy Judge Arthur Gonzalez in a bid to compel Schwartz to appoint an employees committee. A hearing was scheduled for Feb. 27. But Schwartz’s decision erased the need for a hearing. According to Jane Limprecht, a spokeswoman for the U.S. Trustee’s office, the new committee will be made up of five to seven former Enron employees. Both creditor committees will have equal power. “There are many different claims, including severance and 401(k), among others,” Baena added. “I expect the employee committee will be representative of a variety of claims.” Baena says his law firm would like to represent the new committee. But he said the panel is free to choose any firm it likes. Meanwhile, in U.S. District Court in Houston, the University of California was named lead plaintiff last Friday in the shareholders’ class action lawsuit against Enron. The other Enron institutional shareholders who sought lead-plaintiff status included the Florida state employees’ pension fund, the city of New York, and a four-state group that comprised Ohio, Washington, Georgia and Alabama. The University of California’s Enron losses totaled $144.9 million, less than the losses suffered by the Florida fund. The university has retained Milberg Weiss Bershad Hynes & Lerach which has offices in Boca Raton, Fla., New York and several other cities around the country. Several federal judges and experts in the shareholder fraud litigation arena have said that the Florida pension fund already is serving as lead plaintiff in too many class action lawsuits.

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