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Enron Corp.’s creditors will likely get a fraction of the billions they are due, but the bankrupt energy giant wants every penny from those who owe it money. Enron is asking a judge to get tough on more than 10,000 former wholesale and retail customers owing various amounts, from five figures to $1 million, for services rendered or products delivered before and since the company’s scandalous bankruptcy in December 2001. The bills add up to $150 million; about 200 other customers owe larger amounts, for an overall total of more than $1.1 billion. It almost seems like small change in the context of such a notorious bankruptcy — Enron owes an estimated $67 billion to more than 20,000 creditors, most of whom will only see a fifth of what they’re owed. With fees in the case surpassing $400 million, some customers with unpaid bills probably are hoping their debts will be lost in the shuffle, an Enron attorney said. “In many cases smaller counter-parties are taking advantage of the bankruptcy, assuming no one will bother them if they just dig in their heels and refuse to pay what they owe,” said Barry Dichter, a bankruptcy lawyer with Cadwalader, Wickersham & Taft, representing Enron’s defunct trading and retail energy units. “These are entities trying to stay under the radar.” U.S. Bankruptcy Judge Arthur Gonzalez in New York is to rule next month on an Enron request to hold three former customers in civil contempt for unpaid bills totaling $1.5 million, and to assess fines if the bills remain unpaid by a certain date. Enron also wants Gonzalez to compel four other former customers who owe a combined $4.4 million to substantiate claims of inability to pay. Dichter said each customer in question has received at least two letters warning Enron would seek sanctions if they refuse to pay. Any money collected would be added to the pool of cash to eventually be paid to creditors. “Many customers who owe smaller amounts are trying to hide from us. They must believe that Enron will never bother with them because the amounts are not particularly large in any individual case,” Dichter said. “Enron feels court actions will send a very clear message to everyone that owes Enron money that they must fulfill their obligations.” Anthony Sabino, an expert on bankruptcy and energy law from St. John’s University, said the customers deserve a chance to explain why they haven’t paid. “I’d call it, with all due respect, insanity,” Sabino said. “These folks, whether they’re deadbeats or they made mistakes, are entitled to due process. There could be people out there who say they don’t owe or they paid. Enron doesn’t have an exclusive on accuracy.” Rick Tilton, a bankruptcy lawyer and chief executive of Greenacre Asset Advisors, a New Jersey corporate turnaround firm, said customers usually are entitled to hash out the issues in state courts rather than bankruptcy court. Enron spokeswoman Karen Denne said the company will gauge whether to continue with similar requests once Gonzalez rules on the first round. A hearing on the issue is slated for Sept. 11, but Dichter has asked that it be moved up to Sept. 4. Gerald Gline, a bankruptcy expert with Cole, Schotz, Meisel, Forman and Leonard in Hackensack, N.J., said Enron’s effort is unusually aggressive. Under bankruptcy law, creditors are barred from suing for debt repayment upon a bankruptcy filing so a failed company can come up with a plan to emerge from Chapter 11. The so-called “automatic stay” acts as a shield to protect a bankrupt company from creditors and lawsuits so it can focus on reorganization. However, bankrupt companies generally don’t use that provision to force entities that owe the debtor to pay up. “It’s not unusual for customers of someone in bankruptcy to try to wrangle out of paying a debt,” Gline said. “But that is a fairly aggressive use of the automatic stay.” Copyright 2003 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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