Enron Bankruptcy

 

 

Based in Houston, Texas, Enron Corporation filed for bankruptcy in late 2001. At that time, Enron employed as many as 22,000 people and was one of the leading communications, natural gas, electricity, pulp, and paper companies. The previous year, the company reported a strong presence world over and declared revenues around $101 billion.

However in 2001, their popularity faded into notoriety as it was found out that the company had managed its image through a series of institutionalized and creatively planned accounting frauds. This fraud came to be known as the ‘Enron scandal’ and the company became a symbol for large-scale willful corporate fraud and corruption. The accounting fraud led to the creation of Sarbanes Oxley Act of 2002, which designed stricter and more vigilant ways of reviewing financial statements.[br]

History of Enron Bankruptcy

After filing for bankruptcy in the Southern District of New York in 2001, it took four years for Enron to recover. Enron selected Weil, Gotshal & Manges as its bankruptcy counsel but it was until 2004 brought an end to Enron bankruptcy.

Enron sold its last business, Prisma Energy International Inc, to Ashmore Energy International Ltd. in September, 2006. In 2007, Enron changed its name to Enron Creditors Recovery Corporation. The name-change reflected its current objective of liquidating its remaining assets to pay off its creditors.

Products and Trading before Enron Bankruptcy

Enron traded extensively in coffee, sugar, hog, grains and meat futures. In fact, its diversification had led to the formation of seven distinct business units before Enron filed for bankruptcy.[br]

Enron traded more than 30 products that included:

·        Petrochemicals

·        Plastics

·        Power

·        Pulp and paper

·        Steel

·        Weather Risk Management

·        Oil & LNG Transportation

·        Broadband

·        Principal Investments

·        Risk Management for Commodities

·        Shipping / Freight

·        Streaming Media

·        Water & Wastewater

 

After bankruptcy, Enron hit back the 11 financial institutions that helped their employees, Lay, Fastow, Skilling to hide Enron’s true financial situation. These proceedings were called the megaclaims litigation and got the company a whooping $20 million. As of 2008, Enron had paid of all its creditors.