Enron Workers Press 401(k) Lawsuit
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NEW YORK (AP) _ A group of Enron workers asked a bankruptcy judge Thursday to let their lawsuit against the firm proceed, asserting that Enron has a $1 billion liability to its employees for losses in their 401(k) accounts.
The motion, filed with the U.S. Bankruptcy Court in New York, also demands that Enron be barred from using proceeds from insurance policies to pay the legal expenses of top executives.
The move is designed to move employees to the front of the line of unsecured creditors seeking payment by Enron, and to let the worker lawsuit filed in November proceed, rather than to allow the company to duck the claim in the shelter of bankruptcy protection.
``No interest in the bankruptcy should be superior to that of Enron’s workers, and giving them the ability to promptly litigate their claims against the company should be a top priority for our justice system - if not that of Enron itself,″ the workers’ attorney, Eli Gottesdiener, said in a written release.
A spokesman for Enron did not immediately return a call for comment.
Gottesdiener said the assertion that Enron owes its workers $1 billion or more would make them one of the company’s largest creditors.
The figure represents the losses to employees, who accuse the firm of breaching its fiduciary responsibility in managing their 401(k) program. Enron allowed and encouraged workers to keep their savings in Enron stock, even though executives knew the stock’s price was artificially inflated, the suit contends.
The workers asked the court Thursday to let them collect on $85 million insurance policies Enron has to protect itself against claims of fiduciary irresponsibility. Those policies ``are clearly not the assets of the bankruptcy estate and belong to the (retirement savings) plan and its participants,″ said the paperwork filed with the court.
But Enron has hinted that it will use the insurance payout to cover the legal costs for its executives, Gottesdiener said.