Portland General Electric workers whose retirement savings fell along with the fortunes of their bankrupt parent company stand to receive some money from the settlement this week of a massive class-action lawsuit.
But they might not get much, and what they do get wont show up in their retirement plans until next year at the earliest, attorneys involved in the case said Tuesday.
Enron, PGEs parent company, announced late Monday that it had settled lawsuits brought by employees and the U.S. Labor Department accusing it of mismanaging worker retirement money. The company agreed to set aside $356.25 million in its bankruptcy case to pay retirement plan claims.
Workers wont get a share of all that, though. The final payout will depend partly on how many assetsincluding PGEEnron is able to sell off to satisfy creditors, attorneys say. Enron is trying to raise money to pay $74 billion owed creditors.
Lynn L. Sarko, one of the lead attorneys representing Enron employees in the class-action lawsuit, estimates workers eventually will see about 27 cents on the dollar with the settlementafter Enron finishes paying other creditors.
That comes to about $96 million divided among at least 20,000 workers, Sarko said. Divided equally, that would come to about $4,800 an employee, although averages in this type of case are misleading.
Mark Fryberg, a PGE spokesman, estimates between 3,000 and 3,500 current and retired PGE workers could qualify for the settlement. Fryberg emphasized that its too early to tell how much money each PGE worker will receive.
Payments will vary widely among workers depending on how much of their 401(k) plan and Employee Stock Ownership Plan accounts were invested in Enron stock, Sarko said. Employees who had more money invested in the stock will get larger payments.
The case began in late 2001 when a host of Enron workers, including four former and current PGE employees, sued the company in the wake of its financial collapse. They accused the energy giant of mismanaging their retirement funds by matching worker contributions exclusively with company stock, which proved to be vastly overvalued. The stock plummeted when the company admitted it had inflated earnings and concealed the firms true financial condition.
The company also froze access to 401(k) account balances during four weeks in which Enrons stock plummeted about 70 percent.
In 2003, the U.S. Labor Department joined the suit, which also named the companys directors, top executives, auditor and retirement plan manager.
So far, including Mondays settlement, attorneys have recovered an estimated $188 million for Enron workers whose retirement plans were invested in company stock, Sarko said.
Late last year, Enrons board of directors and a group of executives agreed to pay $85 million to settle claims against them. Arthur Andersen Worldwide Societe Cooperative agreed to set aside $40 million in its bankruptcy case for retirement claims. Sarko estimates workers will get about $7 million of that claim.
More recoveries are possible. Mondays settlement did not resolve claims against former Enron chief executives Jeffrey Skilling and Kenneth Lay as well as the plans fiduciary, The Northern Trust Co.
Its possible money could be put into plans as early as next year, said Sarko, a partner in the Keller Rohrback law firm in Seattle.