Ex-Enron workers get 85 million settlement

HOUSTON, TEXAS - Thousands of former Enron Corp. employees will share $85 million in insurance proceeds to compensate for pensions lost when the energy giant collapsed into bankruptcy, a federal judge ruled recently.

U.S. District Court Judge Melinda Harmon formally approved the settlement between Enron's insurers and about 20,000 former employees on despite opposition from former Enron Chairman Kenneth Lay and former Chief Executive Jeffrey Skilling.

The two former executives, who will face criminal trial in January 2006 on charges including conspiracy and fraud at the company, had argued the funds came from Enron's corporate insurance policies that were to be used to help pay for their legal defense.

In approving the settlement, Judge Harmon cited arguments by lawyers for the former employees that they believed a protracted court battle would probably use up any funds they would ultimately be awarded.

"The settlement at this point would save great expense and would give the Plaintiffs hard cash, a bird in the hand," Judge Harmon wrote in her ruling.

Lawyers for the employees had argued they could be owed as much at $1.5 billion, although Judge Harmon said it was unlikely that amount would have been awarded.

Lynn Sarko, a lawyer for the former Enron workers, said the settlement money would be paid to the employees in proportion to their losses suffered from holding Enron stock in their pension portfolios.

"There will be people who get tens of thousands of dollars," Sarko said.

Enron filed bankruptcy in December 2001 after its use of bogus off-balance sheet financing to hide billions of dollars in debt came to light.

The company emerged from bankruptcy proceedings late last year, although its remaining assets are in the process of being sold to pay creditors.