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Gold/Mining/Energy : Enron - Natural Gas Industry
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To: CJ who wrote (1160)12/7/2001 1:50:32 PM
From: Robert Graham  Read Replies (1) of 1433
 
All the Chapter 11 protection facilitates is time for the company to consider other options that may indeed include bankruptcy. A Chapter 11 reorganization effort is used to give the company time to recreate a viable business plan and manage their financing. This can include the company determining how best to sell off its operating units and other significant assets if that is the route they choose to go. Or just give them time to determine if they will indeed file for bankruptcy, the liquidation of the company, which may turn out to be the end result of this process facilitated by their current protection. Identification of their debtors, the type of debtor, and the amounted owed would be part of this process. Determination of the impact of current and future lawsuits would also be a part of this.

Enron likely does not know right now which option is the most viable path to take, that which would be in the best interest of the company and its shareholders. I am sure they are investigating their options right now. However, I do believe that Enron will eventually file for bankruptcy. This is where the company will be liquidated and cease to exist. This belief, as shared by others, is where my comments come from. In this regard, my purpose was to detail the pecking order of creditors in an attempt to answer the question about the likelihood of the common stock holder getting anything out if this in the end.

I do thank you for pointing out the difference between the different types of protection the court system affords a business. I sometimes find myself mixing up the numbers myself. :-)

Any comments?

Bob Graham
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