September 23, 2003

Hope They Didn't Spend All the Money

Shortly before Enron filed its bankruptcy petition, it made accelerated payments of deferred compensation to certain executives, to the tune of some $53 million. Yesterday, a bankruptcy judge ruled that those payments had to be thrown back into the general pot that will be shared by the unsecured creditors. See this Associated Press story for more details.

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The execs apparently will be entitled to their proportionate share of the unsecured-creditors' pot. Any guesses on how much they'll eventually see?

The basis for the judge's order seems to have been that the deferred-comp payments constituted "avoidable preferences" under the Bankruptcy Code. For some general information on that subject, see, e.g., a site called Moran Law.

September 23, 2003 in Bankruptcy, Leadership and Management | Permalink | Comments (1) | TrackBack