Enron Sues Citigroup, J.P. Morgan

NEW YORK -- Enron Corp. sued Citigroup Inc. and J.P. Morgan Chase & Co. to recover more than $32 million of fees it paid in the month before it sought bankruptcy protection, Reuters reported.

Houston-based Enron filed its complaint against the banks, which also are Enron's largest creditors, Tuesday in U.S. Bankruptcy Court in Manhattan.

Enron said the payments unfairly enriched the banks, and said it received "less than a reasonably equivalent value" in exchange. It said it is seeking to recover about $18.8 million from Citigroup and $13.6 million from J.P. Morgan, respectively the largest and second-largest U.S. banks.

"It's unusual because of the size of the fees, but the legal theory is not novel," said Peter Antoszyk, a partner at Brown Rudnick Berlack Israels in Boston, said. "The bankrupt company would have to prove that it received no real value for the fees paid. Cases such as these are very fact-specific."

-- NYSSCPA.org News Staff

Posted on 11/13/03