Enron Creditors Allowed to Sue Lawyers, Auditors, Former Execs

The bankruptcy judge in the Enron case has ruled that the energy company’s creditors can sue two Houston law firms, an accounting firm and about three dozen former executives connected with the company’s demise.

Creditors were granted permission to add the Vinson & Elkins and Andrews & Kurth law firms, accounting firm Arthur Andersen, and about 30 former executives to a civil lawsuit filed last year in Montgomery County, Texas, Reuters reported. U.S. Bankruptcy Judge Arthur Gonzalez made the ruling Monday in New York.

The Texas lawsuit, which alleges negligence and fraud, already names nine former Enron executives, including former Chairman Kenneth Lay, former Chief Executive Jeffrey Skilling and former Chief Financial Officer Andrew Fastow.

After the lawsuit was filed in October of 2002, it was included in a flurry of civil claims awaiting action by Judge Melinda Harmon in a Houston federal court.

Creditors believe the suit would move faster in Montgomery County. It could be the first civil trial against the prominent former Enron executives. James Derrick, the company’s former general counsel, is among the potential new defendants.

"We're in Montgomery County because we're advancing only state law claims, and that venue is far more efficient than the one being bogged down" with two class-action lawsuits, said Charles Cunningham, a lawyer for the creditors.

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