The Official Committee Of Unsecured Creditors of Enron is trying to put the kibosh on a request by former Enron employees seeking the balance of severance packages not yet collected after the company filed for bankruptcy. The committee, which includes J.P Morgan, Citigroup, Bank of New York and Credit Suisse First Boston, claim the former employees of Enron are no longer entitled to their severance packages in response to a request for compensation made on behalf of the former employees by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) on Feb. 14. Luc DesPins, counselor for the credit committee, did not return calls by press time.
Babette Ceccotti, legal counsel for the AFL-CIO, explained that in the court last week the creditors pointed to a provision in a company document which states the company is not responsible for severance packages once a bankruptcy is filed. But Ceccotti's client is challenging this, stating that employees were not privy to this information during their employment. According to the AFL-CIO, Enron employees received what is called a "summary plan description" upon employment and did not receive a completely detailed document regarding severance in the event of a bankruptcy. "What document governs and which gets priority over the other document is the issue," she said. Next Tuesday, the judge will conduct oral arguments and set a schedule [for resolution]," Ceccotti said. Thus far, Enron employees received a small portion of their severance packages according to Ceccotti, but filed with the bankruptcy court for the full amount on hardship grounds.