Posted on: Friday, November 30, 2001

Lawmakers call for probe into Enron's troubles

By Noelle Knox
USA Today

NEW YORK — Enron stood on the precipice of bankruptcy yesterday, while congressional leaders called for an investigation and hearings on the shocking demise of the world's largest energy trader.

With almost $62 billion in assets, Enron would be the largest company ever to file for bankruptcy protection. Enron is almost twice the size that Texaco was when it sought refuge from creditors in 1987 with $36 billion in assets.

Enron, with its stock virtually worthless, hired bankruptcy lawyers and a restructuring adviser yesterday. The company also sought credit protection for its European operations.

"That's certainly a definite step toward bankruptcy in the United States. It will probably come within days, if not hours," said Robert Christmas, a bankruptcy lawyer at Nixon Peabody.

In Washington, Democratic Senate Majority Leader Tom Daschle asked for a probe into Enron's problems, while Republican House Energy and Commerce Committee Chairman Billy Tauzin told his staff to prepare for hearings on Enron.

Collateral damage from Enron's fall rippled through world markets. Enron's stock was again the most heavily traded on the New York Stock Exchange — and one of the biggest losers. The shares dropped 41 percent, or 25 cents, to 36 cents.

Less than a year ago, Enron had a stock price of nearly $85. Enron was a symbol of power in the power industry and controlled almost one-fourth of the U.S. market.

But in October, Enron announced a third-quarter loss and some surprising charges, including the write-down of investments in partnerships controlled by the company's former chief financial officer. That raised concerns about conflicts of interest and sparked a regulatory investigation.

Enron turned to rival Dynegy, which offered to buy Enron for $9 billion. But Enron revealed more financial problems. The deal fell apart Wednesday after credit agencies slapped "junk" ratings on Enron's debt.