Hearings on Enron Corp.’s reorganization plan began last week in a New York City courtroom, and barring any legal glitches, acting CEO Stephen Cooper said he expects the final plan to be approved. Although it still faces hundreds of lawsuits, Enron could emerge from bankruptcy by the end of the year.

The confirmation hearings began Thursday in the U.S. Bankruptcy Court for the Southern District of New York and are expected to take about a week. Enron creditors voted to approve the reorganization plan last month (see Daily GPI, June 1). U.S. District Judge Arthur Gonzalez, who from the beginning has overseen the second largest bankruptcy filing in U.S. history, is expected to take about a week to issue his decision once the hearings are completed.

“We hope to have the confirmation hearings wrapped up by the end of next week,” Cooper told Reuters on Thursday. “Hopefully, he will find we met all the legal tests required for a successful confirmation,” Cooper said of Gonzalez.

“Our counsels have been able to resolve very effectively the bulk of objections,” Cooper told Reuters. “Many of them appear to be highly technical. Those that aren’t, we’ll deal with in the confirmation process.” He said he was “cautiously optimistic we’re going to have a successful undertaking here.”

If confirmed, Enron may be able to emerge from bankruptcy by the end of the year, according to Martin Bienenstock, one of Enron’s lawyers. However, the claims against Enron’s assets after the bankruptcy process is completed could take several years, he said. Claims have been reduced to about $134 billion, but that total eventually may be reduced by about half, he said. Hundreds of lawsuits against the company also have to be resolved.

In related news, two former Enron employees and four ex-Merrill Lynch employees begin their trial on Monday in Houston over a fraudulent sale of Nigerian barges (see NGI, Sept. 22, 2003). Federal investigators allege that employees from both Enron and Merrill agreed to “park” two Nigerian power plant barges on Merrill’s books. Enron then reported $12 million in false earnings and $28 million in cash flow in the fourth quarter of 1999.

Investigators said the earnings were bogus because Enron executives, including indicted CFO Andrew Fastow, had secretly promised the investment bank that it would buy back the barges with interest. Allegedly, Merrill never took on the ownership risk. Prosecutors say Merrill only agreed to buy the barges after Fastow orally promised to repurchase them at a hefty premium.

Although he is cooperating with prosecutors, Fastow, who has already pleaded guilty, is not expected to testify. However, ex-Enron executives Michael Kopper and Ben Glisan, who have also pleaded guilty, are on the prosecution list to testify.

U.S. District Judge Ewing Werlein will oversee jury selection in the trial beginning Monday in Houston, with opening statements set for Tuesday. Werlein has told attorneys that he expects the trial to be completed by mid-July, when his vacation begins.

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