The U.S. bankruptcy judge handling Enron Corp.’s bankruptcy proceedings on Monday froze the payments of Enron North America that had been funding operations for other business units. Since Dec. 2, 2001, when Enron filed for bankruptcy, Enron North America has given $632 million to the parent company for disbursement to various units. Although some of the money has been returned, creditors of Enron North America have suggested the subsidiary is being “plundered” and requested a halt to the payments.

In a 17-page ruling, Judge Arthur T. Gonzalez ordered Enron to stop the payments for 30 days until a court-appointed examiner studies the transfers. Following the 30-day period, Gonzalez said, Enron will have to guarantee that the loans will be repaid. Gonzalez’s order limits disbursements by Enron to Enron units that have not filed for bankruptcy to $70 million in intercompany loans. Now, creditors and Enron are negotiating over the role of the cash system examiner.

In December, Gonzalez allowed Enron to immediately borrow up to $250 million to continue its operations. Another hearing not yet scheduled will determine Enron’s request for a credit line up to $1.5 billion. The loan and the credit line, if approved, would be repaid before all other creditor claims. Enron attorney Martin Bienenstock said Enron had not pushed to obtain the credit line because it would have been used to pump up the commodity trading arm, which has since been sold to UBS Warburg. The commodity trading unit alone generated almost 90% of Enron’s $100 billion in revenues in 2000.

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