Friday, February 23, 2007

Enron Trial Against Banks Delayed by 1 Week

Bloomberg, Laurel Brubaker Calkins and Jef Feeley, 23 February 2007

The judge overseeing Enron Corp. investors' $40 billion lawsuit against the company's former lenders delayed the trial by one week, to April 16.

U.S. District Judge Melinda Harmon in Houston yesterday pushed back the start of the trial, originally set for April 9, after refusing to delay the case indefinitely while an appeals court decides whether shareholders can continue to sue Merrill Lynch & Co., Credit Suisse Group and Barclays Plc as a group.

``Everybody is happy to have another week to get ready for trial,'' William Lerach, the investors' lead lawyer, said in an interview today.

Enron was the world's largest energy-trading company, with a market value of as much as $68 billion, before it collapsed in December 2001. The bankruptcy, the second-largest in U.S. history after WorldCom Inc., wiped out more than 5,000 jobs and at least $1 billion in retirement funds.

Enron's investors accused the Houston-based company's banks of helping former Chairman Kenneth Lay and ex-Chief Executive Officer Jeffrey Skilling manipulate company finances by disguising debt as loans, financing sham energy trades and using off-the-books partnerships to hide losses and inflate revenue.

New York-based Merrill, Zurich-based Credit Suisse and London-based Barclays have denied the allegations. On Feb. 5, Merrill and Credit Suisse told a U.S. appeals court in New Orleans that shareholders shouldn't be able to press their suit as a group because they can't prove that the firms directly participated in the accounting fraud at Enron.

Mark Herr, a Merrill spokesman, said he had no comment on Harmon's decision to delay the trial. Penn Pendleton, a spokesman for Credit Suisse, and David Braff, a New York-based lawyer for Barclays, weren't immediately available for comment.