Enron Examiner: Banks May Lose Claims

NEW YORK -- Six investment banks risk losing their claim on more than $5 billion owed by Enron Corp. because they helped the energy trader cheat investors, bankruptcy examiner Neal Batson said in a report filed on Monday, according to Reuters.

Batson said there is evidence to conclude that the six banks -- which also include Barclays Bank Plc, Canadian Imperial Bank of Commerce, Deutsche Bank AG and Merrill Lynch & Co. -- knew of "wrongful conduct" related to Enron's transactions, and "aided and abetted" Enron officers in breaching their fiduciary duties.

This, he said, might lead a court "to determine that the claims of such financial institutions, totaling in excess of $5 billion, may be equitably subordinated to the claims of other creditors."

Batson's conclusions, if endorsed by the bankruptcy court and upheld through any appeals, might mean that the banks would receive nothing for their claims. Creditors under Enron's reorganization plan are already slated to receive less than one-fifth of the roughly $67 billion they are owed.

-- NYSSCPA.org News Staff

Posted on 7/29/03