Under a $29 million deal approved Wednesday by U.S. Bankruptcy Judge Arthur Gonzalez in New York, 4,200 former Enron employees will receive up to $13,500 each in severance pay.
”This gives them a beacon of hope,” says Richard Rathvon, co-chair of the Enron Employment-Related Issues Committee, which worked with the AFL-CIO and Jesse Jackson’s Rainbow Push coalition to negotiate the deal with Enron over the past six months.
The former workers, who were fired in December as the Enron scandal worsened and the energy-trading company filed for bankruptcy protection, should get their severance checks by October.
”It’s a big relief for everyone,” says Deborah Perrotta, a former Enron administrative assistant. ”It’s not as much as we wanted, but it’s better than nothing.”
The money will give a big boost to Perrotta, who lost $40,000 on Enron stock in her company 401(k) account and other mutual funds.
She and her husband, a transportation consultant whose business has suffered during the recession, lived for eight months without health insurance. Local churches helped the family pay its mortgage and car bills.
”Now,” says Perrotta, who just landed a job as a field organizer for the Texas Federation of Teachers labor union, ”we can go on with our lives.”
The severance agreement does not block the former employees from taking part in the ongoing class-action lawsuits against Enron on behalf of shareholders and 401(k) participants.
The former workers also may get part of $85 million in retention bonuses paid to Enron executives around the same time that Enron filed for bankruptcy reorganization in winter. The employees’ committee plans to argue for that money in bankruptcy court.
Also Wednesday, Gonzalez postponed a ruling on the fate of $12 million that former Enron executive Michael Kopper agreed to give up as part of his recent plea deal with federal prosecutors.
Kopper pleaded guilty last week to fraud and money laundering, and he agreed to surrender the $12 million to the Justice Department and the Securities and Exchange Commission, which hopes to return the money to investors.
But creditors in the Enron bankruptcy case sued Kopper on Monday, laying claim to the $12 million. Gonzalez issued a temporary restraining order stopping transfer of the funds. On Wednesday, he extended the order to Sept. 16.
The Justice Department and the SEC, believing that the bankruptcy court lacks jurisdiction over criminal cases, hope to move the creditors’ lawsuit against Kopper into U.S. District Court in New York.
Attorneys for the government and creditors’ committee will file their arguments on a change of venue for the lawsuit over the next two weeks.