A Case Study of U.S. Corporate Reorganization Process：An Example of Enron Corporation
Date Issued
2004
Date
2004
Author(s)
Hsiung, Wen-Wei
DOI
zh-TW
Abstract
During the past decade in America, we have witnessed that not only small and medium but also big enterprises might file bankruptcy. Among those famous cases are WorldCom, Enron, United Airlines and K-marts. Once big enterprises with enormous assets, liabilities and employees fall, the impact on the stability of society is immense: thousands of employees or investors losing their jobs or investments. Moreover, other related businesses may suffer great loss and then fall too. Therefore, corporate reorganization system was created for alleviating these consequences. The company facing financial crisis could file bankruptcy and choose chapter 11 for protection. Under supervision of bankruptcy court, the company could adjust the relationship among its employees, stockholders and creditors, and then revitalize business.
This study takes Enron corp. as an example to introduce and analyze its reorganization process. The purpose of reorganization is maximizing the value of assets. By following this principle, Enron sold most of its valuable assets, including natural gas and electric trading business, pipelines business and overseas asset. As for other remaining valuable assets will be transferred to two new holding companies (i.e., CrossCountry Energy Corp. and Prisma Energy Inc.). CrossCountry Energy will hold Enron’s assets located in United States, and Prisma Energy will hold Enron’s international assets. According to Enron's plan of reorganization, Enron will sell all of its remaining assets and their creditors will receive cash mixing with stock. The recovery rates of every general unsecured creditor’s claims are around twenty percent on average. Since Enron filing bankruptcy, it has been taking more than two years to negotiate with its creditors for persuading them to accept the reorganization plan. Up to now, 107 classes of creditors agree to accept the plan, and only 7 classes of creditors reject the plan. After bankruptcy court confirming the reorganization plan, Enron can start to repay creditors’ claims, and emerge from bankruptcy.
Subjects
安隆
破產
重整
Enron
reorganization
bankruptcy
Type
other
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