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Thursday, 2 January, 2003, 18:43 GMT
US bank settles Enron claims case
![]() Enron went bust over sales of energy years ahead
JP Morgan Chase has agreed a multi-million dollar settlement with 10 insurance firms that it was suing over contracts with disgraced energy firm Enron.
The insurers had provided guarantees for contracts between Enron and Mahonia, an offshore unit of JP Morgan Chase, the second biggest investment bank in the United States. JP Morgan was suing the insurers for a total of $1bn (£600m) for guarantees on Enron's future oil and gas trades. Enron filed for bankruptcy a year ago, voiding its future energy trading contracts. Last minute settlement JP Morgan said the ten will pay up about 60% of the total it was claiming from them.
Enron's collapse left thousands of its staff jobless and without pensions, caused shock waves in financial markets and hearings in Congress and raised fears about the reliability of other major firms' accounts. The bank reached a last minute deal with the ten insurance firms just as the jury was due to retire to consider its verdict in the month-long case in a Manhattan federal court. However the jury will decide on the bank's claim against an eleventh insurance firm, Liberty Mutual Insurance, which did not take part in the settlement. Questionable contracts Enron's approach to writing forward contracts became a focus of controversy after the former stock market darling went bust. Enron's habit was to count earnings from forward contracts as part of current year earnings, giving investors a misleading picture of its financial health. JP Morgan stock holders have welcomed the settlement, saying it will remove the uncertainty brought about the lawsuit. The insurance firms had argued that JP Morgan's contracts with Enron amounted to indirect loans. The settlement was put before a federal judge in a the Manhattan court.
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