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Enron director board restructured
Six members of Enron`s board of directors, a panel blasted for its failed oversight of the energy giant, are exiting the firm as part of its accelerating reorganisation plan, the company said on Tuesday.
Six members of Enron's board of directors, a panel blasted for its failed oversight of the energy giant, are exiting the firm as part of its accelerating reorganisation plan, the company said on Tuesday.
Enron said in a regulatory filing that the resignations are effective in 30 days, which will leave eight members on the panel.
In a Securities and Exchange Commission filing, Enron said that the six who are resigning include three of the company's longest-serving directors and three who must travel long distances to fulfill their governance obligations.
But the most notable resignation is that of Robert Jaedicke, an accounting professor and former dean of Stanford University's Graduate School of Business who served on the board's embattled audit committee. Jaedicke testified before the Congress, and defended his role as the watchdog of Enron's finances. In addition, the bankrupt energy trading group said it believes that current shareholders will not receive any stake in the reorganised group because the liquidated, undisputed claims against the company exceed the fair market value of its operation and assets.
"Consequently, Enron believes that its existing equity does not and will not have value and that any Chapter 11 plan of reorganisation confirmed by the Bankruptcy Court will not provide Enron's existing equity with any interest in the reorganised debtor," the company said in a statement.
In a Securities and Exchange Commission filing, Enron said that the six who are resigning include three of the company's longest-serving directors and three who must travel long distances to fulfill their governance obligations.
But the most notable resignation is that of Robert Jaedicke, an accounting professor and former dean of Stanford University's Graduate School of Business who served on the board's embattled audit committee. Jaedicke testified before the Congress, and defended his role as the watchdog of Enron's finances. In addition, the bankrupt energy trading group said it believes that current shareholders will not receive any stake in the reorganised group because the liquidated, undisputed claims against the company exceed the fair market value of its operation and assets.
"Consequently, Enron believes that its existing equity does not and will not have value and that any Chapter 11 plan of reorganisation confirmed by the Bankruptcy Court will not provide Enron's existing equity with any interest in the reorganised debtor," the company said in a statement.
The decision signals that shareholders -- who are typically the last in line to recover anything under a Chapter 11 bankruptcy reorganisation -- will have civil lawsuits as their only means of recovering any value to their investments. Enron shares, which peaked at more than $90 in August 2000, closed on Tuesday at 33 cents in over-the-counter trade.
"What this means is that shareholders who thought they were on the short end of the stick aren't even on the stick," said John Olson, an analyst with Houston investment bank Sanders Morris Harris.
"There is going to be a real dogfight to get a good recovery. It is telegraphing a situation where even the subordinated creditors had better start scrambling," he said.
Bureau Report