Professional Costs in Enron Bankruptcy May Hit $1B
AccountingWEB reported in November of last year that the failed energy giant Enron said it may spend close to $1 billion in associated costs with its bankruptcy proceedings by the end of 2006.
According to a recent Wall Street Journal report, the 18-month probe has produced a four-volume report, totaling 4,500 pages with 14,000 footnotes referencing hundreds of thousands of pages of supporting documents.
The final tab: more than $90 million.
"I really believe that we have added value," says Mr. Batson, Partner at Alston & Bird, in his first newspaper interview about his tenure as the Enron examiner. While $90 million is "a substantial amount," Enron's financial machinations were "breathtaking" in their complexity, he says.
Original Article - 11-2003 - Enron has already spent more than $514 million in legal, professional and accounting fees since the company filed for reorganization on December 2, 2001, according to the Texas Attorney General's office. And the company predicts it will spend $146 million on professional fees in the second half of this year.
The estimates were included in more than 1,000 pages of amended documents Enron attorneys submitted to bankruptcy court last week to back up the third version of its reorganization plan, final approval of which is expected in January. Enron is set to ask U.S. Bankruptcy Judge Arthur J. Gonzalez to give initial approval to the plan at a hearing today.
Gonzalez, who is also presiding over the WorldCom bankruptcy, has appointed fee audit committees to examine bills submitted to the court in both cases. The audit committee in the WorldCom case recommended that several law firms and financial advisers lower their bills by hundreds of thousands of dollars.
Enron, its bankruptcy lawyers and some bankruptcy professors have defended the company's expenditures.
"This is undoubtedly the most complex bankruptcy in U.S. history," Enron spokeswoman Karen Denne said Friday. She said the budget includes the costs of winding down the company and ongoing lawsuits.
Enron went bankrupt after overstating profits, hiding debt and using accounting tricks to make the company appear financially successful. Thousands of employees lost their jobs and their retirement funds, and stock became worthless.
Under the proposed reorganization, most of the company's 24,000 creditors would receive about one-fifth of the estimated $66.4 billion the company owes them.
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