Equitable Subordination in this Case?
(posted by request)
The White Paper
Think about this:
1. Creditors fired Lay.....he resigned "in cooperation" with the committee, and remained on the board long enough to arrange his severance.
2. Creditors immediately installed Cooper......it was made to appear that they rubber stamped him, but any way you call it, he is their boy.....and his 15 man goon squad is as well. Enron Corp is paying well over a million a month for their services plus their expenses for what they are doing! Big bonus if they do it right, too.
3. The frightened old Board of Director resignations were announced immediately......these people cooperated for good reason....by design or default they contributed to creating the demise.
4. Cooper & Company (of 15) are choosing the “new” Board of Directors. Does anyone believe that he will choose Directors with a view to reduce the debt and save the existing company and common equity by any means possible? I don't!
5. McMahon has sold out. He has gone from saying "shareholders" to "stakeholders", and referring to a new company. His reward is that he will one day be the new and genuine CEO when Coopers task is done.
6. Make no mistake......the creditors are running things.....They have the upper hand in Court, and they are running the company and influencing the Enron tactics as well, IMO. We are on a hellbound train traveling at "light speed" to a nice clean conclusion without a fair look at what really happened!
7. There is no way to stop what has been set into motion except to go into Court and say "not so fast, lets take a good look".
8. The immunized testimony of Duncan and Glisan (and hopefully others) will reveal some creditor dirt, IMO. Congress is looking at this issue somewhat. But will these things come to light in time to influence the re-org plan to be submitted or its approval? "Light Speed", right??
9. We need to move the Bankruptcy Court to slow down.....once re-org actually happens, it is over!
****************************************************************************
Right now, there is absolutely no reason or representation to preserve the present common float. In fact every single indication is that it will be cancelled in due course. It is wishful thinking to pin any hope on boilerplate "forward looking" statements.
A variety of sub-groups of common shareholders have pig-in-a-poke claims and lawsuits against the soon to be extinct Enron Corporation, by virtue of having been employees, members of other plans, and on and on ad nauseum. The single exception to this is the common shareholder Milberg/Lerach suit, which has a cutoff date, and ironically names Enron Corporation itself as a defendant! This suit is contrary to saving the company and the common, yet common shareholders are members of the class! enronfraud.com
The actions in the above paragraph do not plead for retention of the common float as it is constituted today.....in fact every one of those actions are a nail in the coffin for the current float, as they are all based on the losses incurred. It is fair to say that all members of those classes have accepted that the common float is a dead issue, wouldn't you agree? Read the following….ANOTHER action that does not address the common float!
Severed Enron Employees Coalition Gains Seat On Class Action Steering Committee
HOUSTON--(BUSINESS WIRE)--Feb. 27, 2002--United States District Judge Melinda Harmon has signed an order that grants the Severed Enron Employee Coalition (SEEC) a substantial role in the mammoth Enron class action litigation, on behalf of former Enron Corp. worker….. The purpose of SEEC is to identify and articulate the issues of most interest to these former employees. Currently, these issues include, but are not limited to, asserting the rights of former employees who have incurred significant losses in their 401(k) accounts and who have been denied adequate severance, vacation and bonus compensation……Lawyers for SEEC will help set the direction of the many Enron-related lawsuits as part of a five law firm steering committee. ragingbull.lycos.com
*****************************************************************************
Can anyone really believe that "creditors" and their affiliated institutions have any concern for retaining their common shares? It is even possible that they sold near the peak and then shorted it and covered at the bottom. In any case, the value of their common shares today is peanuts to them, and a non-issue. They have their eyes on the prize......in fact, one of them already has the biggest prize, the trading operation.
What will for certain seal the fate of this light-speed trip to cancel the common is the lack of a platform with merit and representation to the Court to counteract the amount of debt and the triggers that precipitated creditors to call it in early. As of now, the common float is a deer in the headlights.
*************************************************************************
EQUITABLE SUBORDINATION is true justice!
Our hope is that enough dirt exists on "possible" prior bad acts of some creditors, "possibly" with knowledge of the unstable condition of Enrons house of cards, "possibly" even in collusion with Fastow and others associated with the (3k?)myriad but still murky "partnerships". In other words, "Hey, not so fast, here!.......some of you creditors (may have) had a hand in the demise!" And if we can make a case that they did, the Court can invoke principles of "equitable subordination", EVEN TO THE EXTREME OF DISALLOWING DEBT TRANSACTIONS!!!
Assuming that a comprehensive look at the involvement of creditors in the Enron universe before the fact can be forced /undertaken to reveal enough creditor bad acts;
and the Court chooses to invoke its discretion and lattitude allowed under the Law;
and remedies those acts by disallowing some credit claims and/or transactions;
it could significantly alter the "debt" to "asset" ratio;
perhaps to the point that the Corporation could survive in its present form with the common intact.
"The bankruptcy court generally invokes the sanctions set forth in § 510(c) when the lender has engaged in overreaching or lender control, which occurs when the lender steps beyond the traditional role of a lender and participates in the debtor's business or engages in other egregious conduct that justifies the use of the court's equitable powers. In these situations, the court may decide to subordinate, recharacterize, or even disallow a transaction that would not constitute a preferential transfer or a fraudulent conveyance".
firstam.com
ragingbull.lycos.com
***********************************************************************
FURTHERMORE, THERE IS THE FOLLOWING ISSUE WHICH IS LIKELY TO ERUPT WITH REGARD TO POST-ENRON FUNDS RESULTING FROM SURRENDERING THE TRADING BUSINESS UP FRONT TO A CREDITOR.
The 1/3 money over a 3-10 year period from UBS Wargurg for the trading platform will remain an issue after they morph Enron into a new company without the present common.....and they will hotwire the "plan" with the trust clause below to get it. Clever, yes?
..."Finally, Enron's plan of reorganization -- whenever that blueprint is developed to conclude the case -- may include a so-called "litigation trust." This type of trust has become a rather common feature of reorganization plans in Chapter 11 cases with potential lawsuits that could benefit creditors. The trust provides a vehicle to prosecute those claims, after other financial terms of the restructuring have been concluded."
ragingbull.lycos.com
**************************************************************************
LASTLY, HAVE A LOOK AT THE DUTIES AND ACTIONS OF THE US TRUSTEE IN THIS CASE:
"The United States Trustee Program's duties include policing the bankruptcy system for criminal activity, referring suspected criminal cases to the appropriate law enforcement agencies, and assisting in investigating and prosecuting those cases. Some significant bankruptcy-related criminal cases are described here".
usdoj.gov
CREDITORS COMMITTEE (Constituted Dec. 12, by U.S. Trustee Carolyn Schwartz)
Led by representatives for:
1. commercial bank Wells Fargo
2. energy producer Williams Cos.
Debtor-in-possessor lenders
3. J.P. Morgan Chase & Co.
4. Citigroup Inc.
Others:
5. Bank of New York,
6. Credit Suisse First Boston (resigned, 28Dec01)
7. ABN Amro
8. Credit Lyonnais
9. National City Bank
10 Silver Creek Management
11 Oaktree Capital
12 St. Paul Fire & Indemnity
13 Duke Energy Trading
14 National Energy Inc.
15 Michael P. Moran, an attorney who also retired from Enron in Aug 01, representing former employees, not common shareholders in general!
NEW YORK -(Dow Jones)- Four candidates have emerged as frontrunners for examiner of Enron North America, the unit that generated 90% of parent Enron Corp.'s (ENRNQ) $101 billion in revenue. Most energy merchants are publicly supporting bankruptcy specialist Charles Brewer or D. Michael Lynn, a Dallas judge, for the job. But Enron's 15-member creditors committee have submitted Harrison J. Goldin, the former New York City comptroller, and investment banker Harvey Tepner as candidates, according to people familiar with the matter. The creditors committee wasn't available for comment. biz.yahoo.com
ragingbull.lycos.com
ragingbull.lycos.com |
