Office of the Attorney General News Release Archive
Monday, April 8, 2002
TEXAS ATTORNEY GENERAL'S OFFICE ASKS COURT TO REQUIRE ENRON OFFICERS AND DIRECTORS TO POST COLLATERAL IF LIABILITY INSURANCE PROCEEDS ARE ADVANCED FOR LEGAL DEFENSE FEES
AUSTIN - The Texas Attorney General's Office filed two objections that will be heard in a New York federal bankruptcy court Thursday, April 11, relating to the use of liability insurance proceeds for Enron directors' and officers' legal defense costs.
The objection is to AEGIS Insurance Company's request to pay up to $30 million in defense costs to individual defendants who were former or present Enron Officers and/or Directors. A second similar objection was filed responding to a request by present and former Enron directors and officers for an advance on insurance proceeds for legal defense costs.
The liability insurance policies owned by Enron may be used for some legal defense fees for corporate officers and directors, as well as, any settlements arising from judgments against the corporate officers and directors.
If the court rules that the insurance proceeds may be advanced to Enron Officers and Directors to fund their legal defenses, the State of Texas is asking the court to require that Enron directors and officers put up collateral for any insurance funds they receive.
Officers and Directors found to be negligent would, under the contractual terms of the insurance policies, be entitled to have their defense costs paid for by the insurance companies.
However, any Officers and Directors who are found guilty of criminal acts and/or personally profited from transactions at Enron's expense would be excluded from the insurance policies, according to the insurance policies themselves. The State contends that these directors and officers should not further profit by having their defense costs paid at the expense of Enron's numerous creditors, such as the State of Texas.
"The State of Texas has a vital interest in ensuring that the maximum amount of money be available for Enron's creditors," said Jeff Boyd, deputy attorney general for the State of Texas.
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Media Note: The two objections can be found at the Enron Task Force website located on www.oag.state.tx.us (see Pleadings).
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