January 14, 2003 5:52 AM

And this comes as a surprise?

Abbott assails Enron's lawyers. AG: Bankruptcy gouging taxpayers.

When Enron went belly-up, did any of us really think that anyone but the lawyers would benefit? Well, guess what? Enron's bankruptcy lawyers are making a fortune, and Texas Attorney General Breg Abbott is not happy about it.

Texas Attorney General Greg Abbott blasted Enron's bankruptcy attorneys Monday, saying they are "lining their pockets" with fees at the expense of taxpayers, former employees and investors.

At the present rate of spending, Abbott said, the money spent on lawyers and accountants sorting through Enron's remains could approach $1 billion. He said the company should consider an immediate liquidation.

Since going into bankruptcy 13 months ago, Enron has spent more than $300 million on professional fees -- easily a record -- and is burning through $25 million a month. The situation could linger for months, even years.

"What have we gotten for our money?" Abbott said. "There's been no reorganization plan, and there is no reorganization plan that is imminent.

"Not only are we not even coming close to seeing the light at the end of the tunnel, I don't think we're even in the tunnel yet."

An Enron spokeswoman said the company is undergoing the most complex bankruptcy ever and is spending what it needs to answer a host of difficult questions, such as which claims are valid and how to maximize the value of its assets.

All fees, she noted, are being reviewed by a fee committee established by the bankruptcy judge presiding over the case.

Although the fee issue was followed by his predecessor, John Cornyn, Abbott's comments Monday indicated the office will become more involved in the bankruptcy process.

Almost everyone in this town has a gripe against Enron. The company is an easy target, and it's impossible to defend. It's also an easy target for politicians looking to score some easy points- except that in this case Abbott is right. Creditors and former employess will take it in the shorts. but you can bet the employees will be paid 100 cents on the dollar. That's the way the system works.

The fee total has already surpassed a widely cited record, $200 million spent in the early 1990s by the Luxembourg-based bankruptcy of the Saudi Arabian Bank of Credit and Commerce International, or BCCI.

And although WorldCom's bankruptcy is larger, its financial problems are far more straightforward, and thus its professional-fee expenses are much smaller than Enron's.

The primary firm representing both companies in bankruptcy is New York-based Weil Gotshal & Manges. Early on, its monthly billings to Enron were running more than $6 million a month. In comparable stages of the WorldCom case, the firm billed $1.5 million to $2 million a month.

Abbott acknowledges he doesn't have all the answers to speeding up and cutting cost in Enron's bankruptcy, but said the issue has caught his eye.

After all, he's only been in office for six weeks -- since Dec. 2, the one-year anniversary of Enron's bankruptcy filing.

In my next life, I think 'll be a bankruptcy attorney.

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This page contains a single entry by Jack Cluth published on January 14, 2003 5:52 AM.

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