NEW YORK – A federal judge Thursday approved Enron Corp.'s (search) plan to reorganize its debts, paving the way for the failed energy trading giant to emerge from one of the most expensive bankruptcies in history.
More than two-and-a-half years after the Houston company collapsed amid questions about its financial reporting, U.S. District Judge Arthur Gonzalez in New York signed off on Enron's plan to exit Chapter 11 bankruptcy protection (search) with no notable adjustments.
The judge's approval was widely expected as a vast majority of Enron's creditors had signed off on the plan.
Enron went bankrupt in December 2001 amid revelations of hidden debt, inflated profits and accounting skullduggery. Thousands of workers lost their jobs and millions of investors who hadn't already bolted watched their shares become worthless.
The ventures that once defined Enron as a leader in energy and other markets, such as trading and broadband, are long gone.
Under Gonzalez's ruling, the plan will become effective by the end of the year, letting the company begin distributing proceeds to creditors. The effective date could come sooner if Enron meets certain conditions. However, "there is no firm effective date" set in the ruling, an Enron spokeswoman said.
"There are certain tax issues and change of control issues that need to be resolved before it can go effective," she said, adding company officials have only said they intend to resolve these issues "as soon as possible."
The company has said it expects to distribute about $11 billion in cash and equity in some key assets to lenders and bondholders. Last month Enron's lawyers estimated about $130 billion in claims were still pending, and said they intended to chop down the total to $62 billion after negotiations.
Based on that lower claims figure, creditors to Enron's largest units would get about 18 cents to 22 cents on the dollar.
The second-largest corporate bankruptcy in U.S. history had more than its share of legal battles and stumbling blocks along the way.
When it declared bankruptcy on Dec. 2, 2001, the company left about 24,000 creditors in the lurch, who eventually filed about $1 trillion in claims.
Enron's former chairman and chief executive, Kenneth Lay (search), last week pleaded not guilty to criminal charges that he took part in a conspiracy to dupe investors. Lay was the latest, and highest-ranking, Enron executive to be charged by federal prosecutors.
Reuters and the Associated Press contributed to this report.