Enron Creds Sue Ex-CEO Lay, Wife To Recover Over $70 Mln
WASHINGTON -- Creditors of Enron Corp. (ENRNQ) have sued former Enron Chairman and Chief Executive Kenneth Lay and his wife Linda to recover more than $70 million in transfers, according to court papers obtained.
The committee representing unsecured creditors in Enron's Chapter 11 case said the suit seeks the return of Enron property for the benefit of the company's creditors. The committee filed the suit late Friday with the U.S. Bankruptcy Court in Manhattan with the express authority of the bankruptcy court, according to the suit.
Enron filed for Chapter 11 in December 2001, amid an accounting scandal related to off-balance sheet liabilities.
According to the suit, during the year before Enron's Chapter 11 filing Lay allegedly used Enron common stock to repay loans he had received from the company. The committee says "the tendering of Enron's own stock to repay loans taken in cash was not a fair exchange for Enron ."
In addition to the loan transfers, the committee said that the Lays temporarily assigned their interest in two annuity contracts to Enron in exchange for $10 million in cash. The committee said Enron internal documents estimated that the annuities had a collective value of $4.7 million.
Enron didn't receive equivalent value for these transfers, the committee alleges in the suit, which seeks to void and recover the transfers as fraudulent transfers under bankruptcy and state laws.
Updated February 3, 2003 9:10 a.m. EST
I give it stuff worth jus' $4.70, and then order the company I run to give me $10.00 in cash. Multiply the deal by one million, and I am Ken "Kenny Boy" (and Linda "Jus' Stuff") Lay.
Prediction: The plaintiffs will receive nothing. The lawsuit is too late to be effective. Lay has had plenty of time — over a year — to hide and otherwise legally shield the $70 million he stole by deceiving his employees, shareholders and creditors. That money will be protected by international banking and personal bankruptcy laws, because no doubt Lay has had some pricey Texas legal talent working on saving his ass(ets) since the get-go.
Anybody who has credible inside information — please email me at email@example.com. I will publicize it here and protect your identity if you ask.
UPDATE: The Houston Chronicle later published a more detailed article here.