July 15, 2004

NEW YORK (Reuters) — A federal judge Thursday approved Enron's plan to reorganize its debts, paving the way for the failed energy trading giant to emerge from bankruptcy protection before the end of this year.

More than two and a half years after the Houston company collapsed amid questions about its financial reporting, U.S. Bankruptcy Judge Arthur Gonzalez confirmed Enron's plan.

Under his 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.

The approval was widely expected as a vast majority of Enron's creditors had signed off on the plan. Still, the second-largest bankruptcy in U.S. history had more than its share of legal battles and stumbling blocks.

Enron collapsed in the fall of 2001 after investors discovered that what had been ranked as the seventh-largest U.S. company was really a house of cards, hiding billions of dollars of debt off the books and issuing misleading financial statements. The company left roughly 24,000 creditors in the lurch, who eventually filed about $1 trillion in claims.

Enron's former chairman and chief executive, Ken Lay, last week pleaded not guilty to criminal charges accusing him of taking part in a conspiracy to dupe investors. Lay was the latest, and highest-ranking, of several Enron executive to be charged by federal prosecutors.

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