Deutsche Bank will pay Enron Corp creditors US$25 million ($33 million) and receive US$35 million as part of a settlement in a larger lawsuit over banks' responsibility for the demise of the energy trading company.
Deutsche Bank agreed to essentially give up US$416 million of claims against Enron
as part of the agreement, but has US$390 million of claims remaining, according to a settlement filing in US bankruptcy court for the Southern District of New York.
The filing said Deutsche Bank denied any wrongdoing or liability, and settled to avoid the time and expense of litigating.
Enron Creditors Recovery Corp, the successor to bankrupt Enron, has settled with 10 banks in the "MegaClaims" litigation.
As part of the Deutsche Bank settlement, Enron Creditors Recovery Corp is unwinding three complex transactions.
Deutsche Bank will receive US$35 million for its interests in those deals, and Enron Creditors Recovery Corp will receive more than US$100 million of proceeds for creditors.
The MegaClaims litigation accused banks of, among other things, helping Enron's fraud and redeeming Enron commercial paper early in October and November 2001, just before Enron filed for bankruptcy, thereby depriving Enron of funds that other creditors were entitled to share.
The only remaining MegaClaims defendant that has not settled is Citigroup. That case is expected to go to trial next year. Enron has said it has recovered more than US$11 billion on behalf of creditors, and is seeking "billions more" from Citi.
Once the seventh-largest US company, Enron filed for Chapter 11 protection from creditors in December 2001 amid an accounting scandal in which it hid billions of dollars of debt.
It emerged from bankruptcy in November 2004 and now exists mainly to sell assets, pay debts, and litigate.
- Reuters
