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Miami attorney Scott L. Baena has agreed to represent what appears to be the largest group of former Enron Corp. employees in the Houston energy company’s bankruptcy proceedings in New York. On Jan. 29, Baena, a partner at Bilzin Sumberg Dunn Baena Price & Axelrod, filed a motion in U.S. Bankruptcy Court in the Southern District of New York on behalf of the employee group, the Severed Enron Employees Coalition (SEEC), in an effort to compel U.S. Trustee Carolyn Schwartz to appoint a separate creditor committee exclusively made up of former employees. U.S. Bankruptcy Judge Arthur J. Gonzalez has scheduled a hearing on the motion for Feb. 27. Separate employee committees are highly unusual, experts said. Baena said that the former employees will not be adequately represented unless a committee is established and unless the former employees have counsel of their own choosing. “While at first blush, the whole notion may seem ‘amateurish’ to the cynic, the goals of SEEC actually embody and promote the objectives of the Bankruptcy Code of ensuring that all interests are adequately represented,” Baena wrote in SEEC’s motion to the bankruptcy court. In the wake of Enron’s bankruptcy filing on Dec. 2, the largest in U.S. history, former employees began organizing in an effort to promote their interests in both the bankruptcy proceedings in New York and in the many 401(k)-related class action lawsuits being filed in Texas. The SEEC, which numbers more than 400 people and is growing daily, has adopted a charter, established a board of directors and has hired litigation and bankruptcy counsel. In court papers, Baena says the fired employees “likely represent the largest single-interest constituency of the debtor’s estate.” Following Enron’s Chapter 11 filing, Schwartz appointed an official 15-person bankruptcy committee on Dec. 12. The committee includes such well-known companies as J.P. Morgan Chase & Co., Citigroup and Credit Suisse First Boston. Schwartz also appointed one former Enron employee to the committee. According to SEEC court filings, Schwartz has been inundated with requests for the formation of a second official employee committee but has refused to act. A court order from the bankruptcy court would compel her to appoint an employee panel. Schwartz did not return calls made to her office. Baena said that an all-employee committee is needed. “It is preposterous to expect that a lone former employee can attain any meaningful stature on a committee of 15 which is predominated by banks, bondholders, insurance companies and trade creditors,” Baena wrote in SEEC’s motion to the bankruptcy court. Furthermore, Baena argues, the former employee, Michael Patrick Moran, who was an in-house counsel at Enron, is hardly an appropriate representative for fired Enron employees. “The sole former employee representative has no effective means of either determining the interests and positions of Severed Employees or communicating with a broader cross-section of the community of Severed Employees for their input,” Baena argued. “Worse yet, the existing former employee representative may have an irreconcilable conflict of interest of his own.” “It is a question of what master does he serve,” said John Genovese, a partner at Genovese Joblove & Battista in Miami, who added that an employee committee and a shareholder committee should be established by the trustee. It’s not uncommon to have various committees appointed, said Mark D. Bloom, partner and co-chair of the bankruptcy practice at the Miami office of Greenberg Traurig. But it is “very unusual” to appoint a committee solely comprised of employees, he adds. The standard in deciding whether a separate committee should be established is, Bloom says, “whether the interests are adequately represented or not.” The group organized a month after the Enron debacle. On Jan. 14, SEEC held its first meeting and decided it needed to quickly hire its own attorneys. “Enron will have the best lawyers money can buy,” said Larence R. Jordan, a former employee and the SEEC’s chairman. “We decided that the only way we could have a chance of winning is to get the best lawyers money cannot buy.” On Jan. 17, the group interviewed two teams of attorneys and decided on a group led by George Whittenburg, a partner at Whittenburg Whittenburg & Schachter in Amarillo, Texas. Whittenburg’s group, which is working on the class action litigation in Texas, includes Dies & Hile of Orange, Texas, Spivey & Ainsworth of Austin and McClanahan & Clearman of Houston. SEEC’s legal team includes the current and a past president of the Texas Bar Association. Whittenburg suggested that bankruptcy counsel be hired and recommended Baena. After a telephone interview with SEEC board members, Baena was hired. “Scott has a national reputation,” said Martin Dies III, a partner at Dies & Hile. According to Jordan, the class action attorneys are working on a contingency fee basis. Baena will be paid if SEEC is able to get an employee panel appointed by the U.S. trustee. In bankruptcy cases, the debtor’s estate — in this case Enron — pays for all appointed panels and counsel. “They have to earn it to get it,” Jordan said about attorney compensation. Baena said the SEEC has grown in size at least partly because class action attorneys were filing suits “which embraced employee claims but were not by attorneys picked by the former employees.” Many former employees wanted to organize and get their own counsel rather than rely on attorneys they never hired. At least nine class actions have been filed against Enron in U.S. District Court for the Southern District of Texas. The SEEC filed its own class action on Jan. 24. The SEEC has tentatively scheduled an all-member meeting Thursday in Houston. It is attempting to persuade a cable news channel to broadcast the meeting. In its bankruptcy effort, SEEC’s test comes Feb. 27 in New York, when Baena will go before Judge Gonzalez to argue for an all-employee committee. “The hearing,” Baena said, “is the beginning or the end of the conversation.”

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