HOUSTON -- It was one of the more spectacular corporate bankruptcies ever: Enron Corp., once the seventh-largest company in the country, felled by intricate and illegal accounting tricks.
But as the disgraced company limped toward Chapter 11 closure in 2004, the second-largest bankruptcy in history behind WorldCom Inc. seemed almost secondary -- the public's focus shifted to criminal proceedings against Enron founder Kenneth Lay and former chief executive Jeffrey Skilling. Both were indicted last year, pleading innocent to charges that include conspiracy and fraud, and are awaiting trial.
The bankruptcy case reduced the former energy trading conglomerate first to an operator of pipelines and power plants, and ultimately to a holding company responsible for paying off debts.
"Shareholders are gone, and the company is different. What people associate with Enron now is Lay and Skilling," said David Skeel, a University of Pennsylvania bankruptcy law expert.
As 2005 approaches, trial dates for Lay, Skilling, and former Enron chief accounting officer Richard Causey have not yet been set. Skilling and Causey each face more than 30 counts, including fraud, conspiracy, and insider trading, on charges of being in on various schemes to fool investors into believing Enron was financially healthy so they could pocket millions from sales of inflated stock.
Lay faces seven counts of fraud and conspiracy on allegations of taking over leadership of the financial ruse upon Skilling's resignation in mid-August 2001, less than three months before Enron crumbled into bankruptcy.
In a separate case, Lay is also charged with one count of bank fraud and three counts of lying to banks for allegedly misleading them about his intention to use $75 million in personal loans to buy Enron stock on margin.
But first, five former executives from Enron's defunct broadband unit are scheduled to go to trial April 1. Three -- former unit chief executive Joseph Hirko, and former vice presidents Rex Shelby and F. Scott Yeager -- are accused of fraud, conspiracy, insider trading, and other counts for allegedly touting the broadband network as having capabilities it didn't have so they could sell shares of stock inflated on the hype.
The remaining two -- former accounting executives Kevin Howard and Michael Krautz -- are accused of faking $111 million in 2000-01 from a video-on-demand deal with Blockbuster Inc. that flopped.
Enron crashed in December 2001 on revelations of partnerships and financing schemes that hid debt and inflated profits. US Bankruptcy Judge Arthur Gonzalez confirmed Enron's reorganization plan in July 2004, which aims to pay most creditors about one-fifth of the estimated $63 billion they're owed.
The plan became effective in mid-November, finally canceling nearly dead Enron stock and turning it into a private company. The same day, the company closed on the $2 billion sale of its most prized remaining assets -- whole or part ownership in three domestic natural gas pipelines that employ about 1,200 people.