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The judge in the Enron Corp. bankruptcy case Thursday denied a motion from company shareholders seeking the right to sue the fallen energy trader, citing the potential costs to the company while it tries to repay creditors. Enron shareholders, in a bid to name the bankrupt firm as a defendant in a class action lawsuit filed in a Houston federal court, had asked U.S. Bankruptcy Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York to lift a stay imposed on the company upon its filing for Chapter 11 bankruptcy protection in December 2001. Such a freeze, designed to prevent chaotic scrambles for a debtor’s assets, can shield a company from civil suits after its bankruptcy petition. In denying the request, Gonzalez said the most important factor for his decision is a consideration of the “balance of harm.” Such litigation would substantially encumber the company while the potential benefits to the shareholders are anything but certain, he said. Still, Gonzalez said the shareholders can come back to renew the motion once U.S. District Judge Melinda Harmon in Houston sets a deadline for the plaintiffs to add defendants in the securities fraud class action. Helen Hodges, a lawyer for the University of California regents, the lead plaintiff in the class action, said after the hearing: “We’re glad that the judge left it open to renew the request.” Shareholders in the class action suit are seeking more than $29 billion from the company. Shares of Enron, after a series of disclosures in late 2001 about millions of dollars in hidden debt, lost $68 billion in value from their peak in August 2000. Copyright 2003 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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