Thank you for sharing!

Your article was successfully shared with the contacts you provided.
It’s been a week of courthouse developments for Houston’s Enron Corp., which went bankrupt in December after its stock price slipped below $1 per share. In New York, where Enron filed its Chapter 11, U.S. Bankruptcy Judge Arthur J. Gonzalez is deciding if he will transfer the massive bankruptcy filing to Houston. In Houston, U.S. District Judge Lee H. Rosenthal issued an order Wednesday opening the door for plaintiffs’ lawyers to freeze $1.1 billion they allege 29 current and former officers and directors of Enron reaped in insider trading proceeds from Oct. 19, 1998, through Nov. 27, 2001. And Enron and its would-be suitor, Dynegy Inc., settled a 1-month-old state court suit in Houston filed over ownership of a natural gas pipeline. In Washington, D.C., the U.S. Justice Department has set up a task force to investigate possible criminal charges against Enron. The team will include prosecutors from Houston, New York and San Francisco. In the suit in federal court in Houston, Rosenthal turned down a request from plaintiffs’ lawyers for a temporary restraining order freezing the trading assets of the defendants, saying the lawyers didn’t prove a “sufficient basis” for the order. But she wrote that because plaintiff Amalgamated Bank has asserted “cognizable claims to equitable relief,” she may consider a prejudgment restraint on assets. Rosenthal used the analysis in Grupo Mexicano de Desarrollo, S.A. v Alliance Bond Fund Inc., 527 U.S. 308 (1999) in deciding she has the power to impose prejudgment restraint on the defendants’ assets. Rosenthal presides over Amalgamated Bank v Kenneth L. Lay, which is proceeding outside the bankruptcy because Enron is not a defendant. Rosenthal’s ruling follows a hearing Dec. 7 on the plaintiffs’ motion to freeze the trading assets and set up constructive trusts. A Houston lawyer representing Amalgamated Bank in the securities class action, Roger Greenberg, a partner in Houston’s Schwartz, Junell, Campbell & Oathout, was in depositions Jan. 10 and did not return a telephone message by press time. Jacks C. Nickens, who represents 15 current and former officers named in the suit, says Rosenthal’s decision “seems about right” because the plaintiffs, in his opinion, didn’t put on evidence at the hearing in December of any effort to hide assets. “That is, and should be, a very substantial burden,” says Nickens, a partner in Nickens, Flack & Lawless of Houston. Robin Gibbs, a partner in Gibbs & Bruns of Houston, represents eight current or former Enron directors in the litigation. He says, “While we have a different view of the court’s authority on this point, we recognize that the court has adopted a deliberative approach to dealing with this issue on a step-by-step basis. We regard that as a responsible way to proceed.” Meanwhile, Enron and Dynegy announced Jan. 4 they settled a suit that Dynegy filed in state court in December 2001, seeking to force subsidiaries of Enron to turn over Northern Natural Gas Co., a pipeline company. Houston-based Dynegy alleged in Dynegy Inc. v. CGNN Holding Co. Inc. that it has the right to exercise an option to take over the pipeline because it invested $1.5 billion in Enron after agreeing in November to acquire Enron. Dynegy later decided against the deal. The settlement calls for Dynegy to get the pipeline by the end of January. But still pending is an adversary action Enron filed in bankruptcy court in New York, which alleges Dynegy wrongfully terminated the merger agreement and seeks $10 billion in damages.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.