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After being hired by the largest grassroots organization of former Enron employees and successfully winning appointment of an employee creditors committee in February, Miami attorney Scott L. Baena was not retained to represent the five-person group. In a turn of events that caught many local bankruptcy attorneys by surprise, the firms Kronish Lieb Weiner & Hellman in New York and McClain & Siegel in Houston outmaneuvered Baena, a partner with Bilzin Sumberg Dunn Baena Axelrod & Price in Miami, and jointly won the position as counsel to the employee creditors committee. “I was surprised,” said Patricia Redmond, a partner in the bankruptcy practice Stearns Weaver Miller Weissler Alhadeff & Sitterson in Miami, in a typical reaction. “I thought the hiring of Scott was a no-brainer.” Baena did not return several phone calls seeking comment. Following the Dec. 2 bankruptcy filing by Enron — the largest in American history — U.S. Trustee Carolyn Schwartz appointed a 15-member creditors committee. But the panel dominated by banks, bondholders and insurance companies was criticized as unrepresentative of Enron employees. In January, Baena was retained by the Severed Enron Employee Coalition (SEEC) to win a separate, employee-only committee. After Baena publicly advocating for the group and filing a motion on its behalf in February in U.S. Bankruptcy Court in Manhattan, Schwartz agreed to appoint a committee. More than a month later, on April 2, with a five-person committee appointed, the committee members interviewed Baena and attorneys from three other firms: McClain & Siegal, Kronish Lieb, and Los Angeles-based Pachulski Stang Ziehl Young & Jones. Each of the meetings lasted between 30 and 45 minutes, said David McClain, a partner with McClain & Siegal. After the four meetings, the committee made its decision. Calls to both Kronish Lieb and Pachulski Stang were not returned. According to McClain, prior to the so-called “beauty pageant,” Kronish Lieb approached his firm about joining forces in representing the employee committee. The pitch was straightforward: If the two firms were hired, the employee committee would have attorneys in New York where the bankruptcy proceedings are taking place, and in Houston, where most of the employees live. “Our approach was: What is best for the employees?” said McClain. “By being in Houston we can provide representation where the employees live, and Kronish is in New York.” McClain said Baena never approached his firm about joining forces. McClain also said that the committee was mindful that McClain had been involved in the effort to establish an employee committee from the very beginning. McClain represented an employee group called the Ad Hoc Committee of Former Enron Employees. His group numbered 20 people. By comparison, SEEC, the group Baena represented, numbers more than 400. In January, the two groups joined forces in the shared goal of having an employee committee appointed, McClain said. After Schwartz agreed to appoint the committee on St. Valentine’s Day, both became competitors for the job of representing the committee. Three of the four firms vying for the job had direct connections to the five-person committee named by Schwartz. She appointed one person from Baena’s SEEC and one from McClain’s ad hoc committee, and she moved Michael P. Moran, a former in-house attorney at Enron who was initially placed on the official unsecured creditors committee as the sole employee representative, to the employee committee. During his stint on the official committee, Moran was represented by Kronish Lieb. Pachulski Stang appears to have had no direct connection to the committee. The two remaining representatives on the committee are a current Enron employee and a representative from Boston-based State Street Bank and Trust Co., the fiduciary of Enron’s retirement plans. According to Joe Guzinski, a spokesman for the U.S. trustee’s office, the sole aim in appointing the committee was to include all of the employee constituencies. In doing so, Schwartz appointed a committee that represents both former and current Enron employees. Prior to the appointment of the committee, said McClain, it was unclear whether the employee committee would represent current employees. Over the past month, the committee has been communicating daily and meeting about three times a week, said McClain. Currently, he said, the biggest issue is severance pay. A hearing is scheduled for May 16 on the matter, but the hope is the issue will be settled in negotiations with Enron.

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