With little fanfare, Enron Corp.’s plan to emerge from bankruptcy was approved Thursday morning by the U.S. Bankruptcy Court of the Southern District of New York.

Judge Arthur Gonzalez, who has presided over the multi-faceted case since it began 30 months ago, rejected all objections to the plan in his approval. The final plan still will take several months before becoming effective, as tax issues and transfers are completed. It also is expected to take up to two years to settle hundreds of remaining lawsuits and pay off thousands of creditors, who will receive about 18-22 cents on the dollar.

When all is said and done, what was once Enron — the seventh largest company in the United States and the far and away the leader among energy marketers — will be a shell. Assuming it completes previously announced sales of Portland General Electric (PGE) and CrossCountry Energy, Enron will no longer be U.S.-focused; creditors will receive a combination of cash and equity in Prisma Energy International, Enron’s worldwide natural gas pipeline and power generation business.

The bankruptcy court has approved the $1.25 billion sale of PGE to Oregon Electric Utility Co., a private investment group backed by Fort Worth-based Texas Pacific Group (see Power Market Today, July 12). The Oregon Public Utility Commission, which will hold public hearings on the sale, expects to make a ruling late this year or in early 2005.

CrossCountry, a business which bundled together Enron’s prized natural gas pipelines, is being sold through a bidding process, now underway (see NGI, July 5). Gonzalez in June approved the sale of CrossCountry for $2.35 billion including debt to Southern Union and General Electric’s commercial finance energy unit. Additional bids will be taken until August 23, and then Gonzalez will make a final decision.

With the sale of its two U.S.-centered businesses, all that is left is Prisma Energy, which was proposed as a spinoff by Enron a year ago (see NGI, July 14, 2003). Prisma Energy, which employs about 8,000, holds Central American and Caribbean power projects in the Dominican Republic, Guatemala, Nicaragua, Panama and Puerto Rico; South American gas pipeline and power assets in Argentina, Bolivia, Brazil, Colombia and Venezuela; European power assets in Italy, Poland and Turkey; and Asia Pacific power, gas and liquid petroleum projects in China, Guam, India, the Philippines and South Korea.

“Undoubtedly, this was an extremely complex bankruptcy,” said Stephen F. Cooper, Enron’s acting CEO and chief restructuring officer. “Today’s court approval acknowledges not only the tremendous amount of work that has been accomplished during the last two and a half years, but also the overwhelming support of our economic constituents. We still have certain tax and change of control issues that need to be resolved before the effective date, but we will continue working diligently to address those issues so that we can begin initial distributions to our creditors as expeditiously as possible.”

Under the plan, and assuming the other units’ sales, the proportion of cash-to-equity for the 20,000-plus creditors is expected to be 92% cash and 8% equity. When the claims reconciliation process is completed, the allowable claims against the company are expected to be approximately $63 billion, Cooper said. The cash and equity assets available for ultimate distribution are expected to be around $12 billion, not including recoveries from litigation.

“Enron’s collapse was a tragedy, and we couldn’t restore all of the losses,” said Martin Bienenstock, Enron’s lead bankruptcy lawyer. However, he noted that “all of the value and jobs that were left to save…we were able to preserve them.”

©Copyright 2004 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.