HOUSTON - A U.S. bankruptcy judge ruled Friday that Enron Corp.'s $10 billion battle against rival Dynegy Inc. for abandoning a proposed merger last November will be fought on the companies' home turf.
Judge Arthur Gonzalez ruled in New York that the lawsuit - filed there Dec. 2 alongside Enron's bankruptcy - will be moved to federal court in Houston.
``We believe that moving the proceedings to Houston will provide the parties with the most efficient and least expensive way to resolve this case,'' said Dynegy spokesman John Sousa.
Dynegy had argued that most witnesses, documents and issues central to the dispute are in Houston along with the headquarters of both companies.
Many of those witnesses and documents also will be central to shareholder lawsuits in Houston, Dynegy said, so it made sense for Enron's case to join the Texas fray.
Dynegy claims it properly invoked its right to walk away from the $8.4 billion merger because Enron didn't fully disclose its financial woes.
Enron feared its claim - that Dynegy wrongly abandoned the deal, forcing the energy giant into bankruptcy - would be lost in the massive fraud litigation. It also said the main witnesses, representatives of investment banks who tried to shepherd the merger, are based in New York.
``We look forward to a quick resolution of the case,'' Enron spokeswoman Karen Denne said of Gonzalez' decision.
Enron surrendered a cornerstone of its lawsuit to Dynegy in January when it agreed to turn over its largest asset, the 16,500-mile Northern Natural Gas pipeline.
Dynegy acquired the system, which runs from West Texas to the Great Lakes, in exchange for a $1.5 billion investment in Enron before the merger collapsed. Dynegy dropped a breach-of-contract lawsuit filed in Texas state court when Enron gave up the pipeline.
Enron's interim chief executive Stephen Cooper, hired in January to lead a scaled-down version of the company out of bankruptcy, told workers Thursday that the ability to buy back the pipeline could be important to a successful reorganization.
Denne said Cooper told workers that Enron faces up to $100 billion in debt and lawsuit claims, but the obstacles aren't insurmountable.
In a 90-minute address, Cooper reiterated that Enron would emerge as a much smaller company focused on transporting natural gas and electricity. He also told workers that Enron owes creditors about $40 billion and faces up to $60 billion in possible judgments from lawsuits.
Cooper aims to present a reorganization plan to creditors next month and file it with Gonzalez in New York later this year. He told workers that its success could depend on Enron's ability to regain Northern Natural Gas and retain Oregon utility Portland General Electric.
Denne said Enron is evaluating whether it can scare up enough money to buy the pipeline. The company's repurchase option lasts through June 30.
Also, Cooper said Enron may pull out of an Oct. 8 agreement to sell Portland General to Northwest Natural Gas Co. in Portland, Ore.
Northwest Natural spokesman Steve Sechrist said Friday that the company wants the roughly $3 billion deal to go through. But Enron can keep Portland General with approval from Gonzalez and creditors because the deal was struck within 90 days prior to the bankruptcy filing, he said.
Also, the Oregon Public Utility Commission has delayed its review of the deal to let Northwest Natural study potential tax and 401(k) loss liabilities linked to Enron's bankruptcy, Sechrist said.
``We certainly are committed to completing the deal if we can be assured these liabilities are dealt with,'' he said.
Cooper also told workers that more layoffs are coming, but so far attrition has sufficed, Denne said.
``He wanted to make clear to employees, as we divest assets, unwind businesses and shrink the company, that there will be layoffs,'' Denne said. ``But for now, he said attrition is outpacing any need to shrink the company.''
Right before and after Enron filed for bankruptcy, the company laid off 5,600 workers in London and Houston. Enron's announcement in mid-October of a third-quarter loss and a $1.2 billion writedown in company worth brought alleged accounting abuses to the surface.
Denne said Enron now has 23,000 workers worldwide. Most work for Portland General or one of three U.S. pipelines of which Enron is a full or part owner.
Denne said about 2,200 workers throughout the company have quit since January.
Monday
July 7th, 2025
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