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Enron Sues Pension Agency

From Dow Jones/Associated Press

August 6, 2004

Enron Corp. has asked the court overseeing its bankruptcy case to block the federal Pension Benefit Guaranty Corp.'s efforts to take over four of the energy giant's retirement plans.

In a lawsuit filed Wednesday, Enron accused the federal agency of frustrating its reorganization efforts and usurping the Bankruptcy Court's authority to consider claims against the firm.

"The PBGC is attempting to accomplish in the U.S. District Court for the Southern District of Texas what it could not accomplish in the Bankruptcy Court," Enron said.

The pension agency's objection to Enron's reorganization plan was overruled by the Bankruptcy Court, and the plan was confirmed July 15.

The PBGC is one of a handful of parties that have appealed the confirmation order. At the same time, the agency, which protects private-sector pensions, is trying to proceed with the action it filed June 3 in the federal court in Houston — not in the U.S. Bankruptcy Court in Manhattan where the company's Chapter 11 case is underway — to terminate the four underfunded pension plans.

Enron is asking the Bankruptcy Court to rule that the agency's termination action violates the automatic stay provision of the Bankruptcy Code.

The automatic stay provision blocks parties from filing or pursuing a lawsuit against a debtor company on account of a claim that arose before the company's filing for Chapter 11 protection.

The PBGC has asserted claims against Enron totaling $321.8 million for the four pension plans and another pension plan, the Portland General Electric Co. plan, which isn't subject to the agency's termination action. Portland General, an affiliate of Enron, isn't part of the bankruptcy proceedings. The four plans at issue have about 17,000 participants.