Andersen: Bankruptcy not imminent

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Posted 8:27AM on Tuesday, April 23, 2002

CHICAGO - Arthur Andersen LLP named a restructuring chief who specializes in corporate overhauls and bankruptcies. But even with overseer Paul Volcker saying ``miracles'' are needed, the accounting firm insisted Monday the hiring is not a step toward bankruptcy. With Andersen's options dwindling after talks with the government failed to settle a criminal charge and continued client defections, accounting industry experts have speculated the firm may be forced to file for Chapter 11 bankruptcy protection. However, an Andersen spokesman strongly reiterated Monday that the company won't, despite the hiring of Bryan Marsal as chief restructuring manager. Spokesman Dan Hill said Marsal, of the New York firm Alvarez & Marsal, took the post at the end of March to help Andersen reduce costs in light of lost revenue and to assist in implementing reforms proposed by former Federal Reserve chairman Volcker. ``We are not moving toward bankruptcy,'' Hill said. ``There isn't a liquidity crisis at Andersen. Really what we're trying to do is restructure debt, reorganize the firm and basically re-engineer the way that Andersen operates, consistent with the Volcker reforms.'' Marsal did not return a phone call seeking comment Monday. Andersen has lost more than 10 percent of its 2,300 public audit clients this year. Most replaced the Chicago-based firm after a federal grand jury indicted it last month for alleged obstruction of justice for destroying documents relating to its client, collapsed energy trader Enron Corp. Volcker's own status as Andersen's prospective leader is in question after the collapse of settlement talks with the Justice Department last week. The former Fed chief indicated Monday that he doesn't hold out much hope for Andersen. He did not directly address published speculation that he will resign as head of the oversight board Andersen named in February. ``We (the board) set out a number of conditions that would dictate what we could or could not do,'' Volcker said in a brief statement issued by his New York office. ``At this point those conditions have not been met. But we can always look for miracles.'' Andersen named Volcker to implement reforms in February, granting him wide authority in February to mandate changes. But Volcker's rescue plan, which called for him to install and head an independent governing board, was contingent upon the government abandoning the criminal charge. A trial on the charge is set to begin May 6. Andersen's international operations have been disintegrating in recent weeks as its overseas partners defect to rival firms. Among the latest to go is its Dutch operation, where Andersen confirmed Monday its partners have agreed to merge with Deloitte & Touche.