Thirty-Three States Seek to Block Aid for Enron Execs

Thirty-three states are asking a bankruptcy court to block Enron executives from securing advance money for their legal defense from the bankruptcy estate.

"Enron is seeking an advance payment from bankruptcy court of at least $30 million to pay for the defense costs of its officers and directors. I object," New Mexico Attorney General Patricia Madrid said Friday.

New Mexico joined attorneys general from Alaska, Arizona, California, Connecticut, Florida, Georgia, Hawaii, Indiana, Kentucky, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Vermont, the U.S. Virgin Islands, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

The lead attorney general is Oregon's Hardy Myers, according to news releases issued Friday.

U.S. Bankruptcy Judge Arthur Gonzales is expected to hear objections to the advance fee request at 10 a.m. Wednesday in New York City, Madrid said.

Advancing of funds might accelerate depletion of insurance money for the executives' liability coverage, she argued.

"Enron's directors and officers should not be advanced money for their civil or criminal defense costs before the issue of their individual liability has been resolved," Myers said in a statement. "Under Oregon law, any director found liable to the corporation may be disqualified from being reimbursed for his or her defense costs."

"Enron has not met the minimum requirements of Oregon law for advancing defense costs to corporate directors," Myers said. "As far as is known from the court's records, none of the directors has provided the affirmation required by Oregon law of their good faith belief that their conduct was not unlawful or opposed to the best interests of the corporation. They cannot receive advance payment of costs until this affirmation has been made."

Added Madrid: "The idea of asking the bankruptcy court to provide advance payments for defending those individuals that may ultimately be found responsible for the collapse (of Enron) should be unthinkable."

Tens of thousands of innocent people have been harmed in the Enron collapse, she said, "and their interests should be paramount."