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Gold/Mining/Energy : Enron - Natural Gas Industry
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To: Jaknik2 who wrote (1155)12/7/2001 10:57:39 AM
From: Robert Graham  Read Replies (1) of 1433
 
Share holders frequently never see anything come out of this kind of class action lawsuit. The lawyers are the only ones to see a portion of the money that becomes available.

Here is my limited understanding of the pecking order:

First come the creditors. This includes banks who have an outstanding loan provided to the company, accounts payable vendors that have taken a lien out against the company, those that have alerted the bankruptcy court of money due in previous business transactions, and bond holders.

Next come the preferred stock holders. There are different classes of preferred stock. There is the type of preferred stock that was issued to Dynergy over the natural gas pipeline part of the business. Then there are other senior preferred shares which may or may not be traded in the open market. Then comes the more junior issues.

Last in line comes the common stock holder. Meanwhile, there are the lawsuits. This is where the lawyers will profit before any of the shareholders will receive money. Furthermore, I am sure Enron's trading partners who have lost money in the deal will be suing along with the shareholder.

IMO slim to non-existent chance anyone will see any money out of this. And insurance cannot cover anything unforseeable and not covered or covered but misrepresented in the books. Besides, there will end up quite possibly being hundreds of millions if not billions of valid claims to cover. So the insurance company may contest this in the form of yet another lawsuit against the company.

Bob Graham
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