Some of Enron Corp’s former directors have agreed to a $168 million settlement of a shareholder lawsuit over the collapse of the energy trading company, the lead plaintiff in the case says.
The directors will pay more than $13 million of their own money, while insurance proceeds will cover the remaining $155 million, according to the University of California, the lead plaintiff said on Friday.
The settlement comes on the heels of an agreement announced Friday by investors in WorldCom, another company felled by an accounting scandal, in which 10 former directors agreed to pay $18 million as part of a $54 million settlement.
A lawyer for many of the former Enron directors did not return a call seeking comment.
Houston-based Enron was the nation’s seventh-largest public company by revenue before it spiralled into what was then the largest bankruptcy in American corporate history in December 2001.
In a press release posted on its Web site, the University of California said it would seek preliminary court approval of the Enron directors’ settlement next week. It said the deal, which was reached in October, exhausts all of Enron’s directors and officers liability insurance.
No settlement has been reached with several former top Enron executives, including former chairman and chief executive Kenneth Lay, former chief executive Jeffrey Skilling, and former chief financial officer Andrew Fastow, the university said.
The directors’ settlement was struck in October, but the parties spent the last three months negotiating a complex agreement to provide a framework for court approval, it added.
Other settlements in the case included $222.5 million by Lehman Brothers Holdings, $69 million by Bank of America and a $40 million settlement that covered Andersen Worldwide, the non-U.S. arm of Arthur Andersen, the university said. Arthur Andersen’s U.S. arm, which was Enron’s auditor, is still a defendant.
Enron filed for Chapter 11 bankruptcy protection in December 2001. Its collapse resulted in thousands of lost jobs and billions of dollars of shareholder losses.
The University of California said a trial in the shareholder class-action case was slated to begin on October 16, 2006. The university joined the lawsuit in December 2001, alleging “massive insider trading” and fraud and claiming losses of $145 million on its investments in Enron.