Andersen Won't Dissolve When Audit Practice Ends
Although Andersen is scheduled to discontinue its audit practice on August 31, 2002, the firm has said in a legal document filed in Houston that it will not dissolve at that time and it has no plans to dissolve in the future.
The firm's statement was made in response to a motion for a temporary restraining order made as part of a class-action suit brought by Enron shareholders. Attorneys for the shareholders assumed the former Big Five accounting firm would dissolve through bankruptcy or some other means, making it difficult for the plaintiffs to collect any damages that might be awarded as a result of the lawsuit.
Most of Andersen's employees have left or been laid off and the bulk of its profitable units sold, following its obstruction-of-justice conviction in June. But the firm is not insolvent, and the assumptions about dissolution were premature.
Andersen spokesman Patrick Dorton is quoted by Reuters as saying, "We're an ongoing entity." He declined to comment on the types of businesses Andersen would be involved in after Aug. 31st when less than 3,000 employees will remain on the payroll. The firm is awaiting a decision on its appeal of the conviction.
In its court filing, Andersen said it has suspended the return of capital to partners since March "and has no plans to return capital to them on August 31 or thereafter."
At this point, Judge Melinda Harmon has several options regarding the temporary restraining order. She can either deny the motion or schedule a hearing on the matter.