An agreement reached in July to help Enron Corp. emerge from bankruptcy apparently is unraveling and could fall apart following disputes among the three parties that put together the original compromise.

In a 45-page objection filed last Friday in U.S. Bankruptcy Court for the Southern District of New York, Harrison J. Goldin, Enron’s court-appointed examiner, said the purported compromise began to fall apart in September. He has requested the court adjourn a disclosure hearing set for next week until he receives more information to determine whether to continue on the current course or “whether Enron should change course.”

Goldin, working with the bankrupt company’s debtors and a creditors committee, announced a complex compromise in July that would spin off Enron’s remaining companies into three entities: its North American interests, international businesses and Portland General Electric (see Daily GPI, July 14).

However, following what he said were disputes over solvency, Goldin asked the court to adjourn a disclosure-statement hearing set for Nov. 18. On Oct. 10, said Goldin, a court chambers conference between himself, the debtors and the creditors committee revealed “sharply differing views as to what they had compromised and agreed to in the settlements,” concerning “significant economic issues” related to debtor information. Goldin said the debtors apparently had not addressed the issues adequately in their disclosure statement.

From his standpoint, said Goldin, “what is the basis for the purported global compromise if fundamental elements of the settlement remain subject to attack?” Goldin said he believes that if there were lawsuits attacking Enron guaranty claims, “a critical element of the compromise (a full settlement of all inter-debtor related issues) would be completely undermined…Regrettably, the serious cloud the debtors and the creditors’ committee have put on the compromise has already embittered Enron creditors; their support for it has started to dissipate.”

The disagreement has led to a “renewed call by many active Enron creditors for the development of a separate Enron plan.” Goldin noted that the creditors feel they are not receiving “critical information to which they are entitled,” and that “unanticipated constructions are proffered on issues they believed they had a right to consider resolved.” He also noted that the creditors are being asked to agree to a “monolithic corporate governance structure that is calculated to disenfranchise them,” and that the debtors and the creditors’ committee “are determined to deprive them of a post-confirmation fiduciary who will represent and defend their interests.”

In response to Goldin’s objections, Enron spokeswoman Karen Denne noted that Goldin had supported the July plan and “also the negotiations.” She said the creditors would “lay that out in a response to the court.”

At the disclosure-statement hearing, whether it meets next week or is rescheduled, U.S. Bankruptcy Judge Arthur J. Gonzalez may either accept Enron’s disclosures or ask for revisions. The document has to adequately explain terms of the plan to creditors.

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