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« Mitch Daniels' Pot Luck | Main | The Liberator: Test-Firing The World's First 3D-Printed Gun »
Friday
May102013

ENRON: The Smartest Guys In The Room

OFFICIAL TRAILER

Don't skip the line at 1:37.

Based on the best-selling book by Fortune reporters Bethany McLean and Peter Elkind, Director Alex Gibney reveals how top executives of America's seventh-largest company walked away with one billion dollars leaving investors and employees with nothing.

Note: I spent an hour scouring Youtube for the very best scenes from the full documentary. You can watch every clip on this page in 10 minutes.

 

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GREAT SCENE FROM FILM

Bethany McLean relates how Jim Chanos tipped her on Enron, and the incredibly defensive reaction of management to her first story.

 

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FOCUS ON SKILLING

Start watching at 40 seconds. Do not skip the Harvard interview story beginning at 1:10.

 

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GUYS WITH SPIKES

Start watching at 35 seconds for the story of a division president who sold all his stock during a divorce so he could marry his stripper girlfriend who was pregnant with his child, making him the richest Enron executive after the collapse, worth more than $400 million.

 

---

 

MARK TO MARKET ACCOUNTING

Last clip. Interesting details.

 

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THE COMPLETE FILM

http://www.pbs.org/independentlens/enron/film.html

 

 

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Reader Comments (6)

Brings back memories. A few years back, playing golf with a couple of lawyers who are partners in satellite office of a national law firm told me that 50% of their little office's billing was to Enron (bankruptcy trustee). I said Damn! That's 10 years ago. Their response: "Enron: it's the gift that keeps on giving..."
May 10, 2013 at 3:29 PM | Unregistered CommenterJosie
UPDATES: This is a follow the money version.

Cape Wind, EME, IPM Eagle, IVPC, GDF Suez, Bank of Japan (Mitsui/Mitsubishi)


UPDATE: Edison Mission Creditors Seek Standing to Sue Parent
By Dow Jones Business News, August 01, 2013, 12:45:00 PM EDT

By Jacqueline Palank
(Updates throughout with more details from the creditors' motion.)



Edison Mission Energy's unsecured creditors late Wednesday requested the right to sue parent company Edison International ( EIX ), claiming it drained Edison Mission of hundreds of millions of dollars in value ahead of the subsidiary's bankruptcy filing.

The official committee representing unsecured creditors in Edison Mission's Chapter 11 case is seeking bankruptcy- court approval to pursue legal claims related to the alleged "abusive domination and control" of Edison Mission by its parent.

Representatives of Edison Mission and Edison International weren't immediately available for comment Thursday morning.

While heavily redacted, the committee's motion says its ongoing investigation has discovered numerous potential claims against Edison International, various subsidiaries and certain current and former directors of Edison Mission. Those potential claims include fraud, negligent misrepresentation, breach of fiduciary duty, aiding and abetting breach of fiduciary duty and unjust enrichment.

All told, the committee--whose nine members include Wells Fargo Bank and the International Brotherhood of Boilermakers (Local One)--says the claims could be worth "billions of dollars."

Specifically, the committee says that since Edison Mission's founding in 1986, it hasn't operated independently with the goal of maximizing value for its own stakeholders but has instead operated as a "controlled division" of Edison International. The parent, according to the committee, exploited its control of Edison Mission to enrich itself and its regulated utility business, Southern California Edison.

The committee alleged that Edison International improperly transferred value away from Edison Mission in a series of transactions, including paying $925 million in dividends to a separate Edison International subsidiary in 2007. Edison Mission was, at the time, allegedly insolvent--that is, unable to pay its debts as they came due.

As Edison Mission's financial situation worsened, the committee said Edison International's shareholders took note. Facing a market that believed the two companies to be "inextricably intertwined," Edison International saw its stock price drop about 41% between June 3, 2008, and June 3, 2009, to $25.46 from $43.47.

By 2012, Edison Mission's financial situation was "hopeless," the committee claimed, so Edison International allegedly made one last "unwarranted" cash withdrawal of $183 million from Edison Mission in September and terminated a valuable tax-sharing agreement between the two companies. Edison Mission filed for bankruptcy protection that December.

"These actions have benefitted EIX and its shareholders while causing significant harm to EME and its creditors," the committee said.
Enabling Edison International's control over Edison Mission, the committee alleged, were the Edison Mission officers and directors who were "solely beholden" to the parent company. The committee said Edison International used its subsidiary as a training ground for employees, comparing the relationship to that between a major and minor league baseball team.

"EIX personnel were routinely sent to EME to serve in senior roles, such as president, before being 'called up' to serve executive roles at EIX or SCE," the committee said. "Pursuant to this overall system, loyalty to EIX--not EME--was assured."

The committee is asking the bankruptcy court to let it sue on behalf of Edison Mission, which the committee says has " numerous" conflicts of interest.
"The committee believes that recoveries on the claims could be in the billions of dollars, and that only a conflict- free fiduciary--unlike the debtors and their counsel--will be able to achieve the most value-maximizing outcome," it said in court papers.

The U.S. Bankruptcy Court in Chicago will consider the committee's request for standing to bring the lawsuit at an Aug. 21 hearing.

The request comes days after Edison Mission's bondholders terminated a preliminary deal pledging their support for the power company's restructuring after the company failed to cement the agreement in time. An attorney for the bondholders couldn't be reached to comment.

Based in Rosemead, Calif., Edison International's subsidiaries generate and distribute electric power. Edison Mission operates coal, gas and wind plants and projects.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)
Write to Jacqueline Palank at jacqueline.palank@wsj.com.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
Aug 20, 2013 at 7:13 PM | Unregistered Commenterjohn
While we have much more regarding this story, I will give credit due where it is deserved for reporting this.

https://www.adr.com/Markets/GlobalNewsStory?docID=1-DN20130801014394-6RD6AKUKAD5AATTTUSANOPTKC4

UPDATE: Edison Mission Creditors Seek Standing to Sue Parent
12:45 PM ET on Thursday, August 01, 2013

(Updates throughout with more details from the creditors' motion.)
By Jacqueline Palank

Edison Mission Energy's unsecured creditors late Wednesday requested the right to sue parent company Edison International (EIX), claiming it drained Edison Mission of hundreds of millions of dollars in value ahead of the subsidiary's bankruptcy filing.
The official committee representing unsecured creditors in Edison Mission's Chapter 11 case is seeking bankruptcy-court approval to pursue legal claims related to the alleged "abusive domination and control" of Edison Mission by its parent.
Representatives of Edison Mission and Edison International weren't immediately available for comment Thursday morning.
While heavily redacted, the committee's motion says its ongoing investigation has discovered numerous potential claims against Edison International, various subsidiaries and certain current and former directors of Edison Mission. Those potential claims include fraud, negligent misrepresentation, breach of fiduciary duty, aiding and abetting breach of fiduciary duty and unjust enrichment.
All told, the committee--whose nine members include Wells Fargo Bank and the International Brotherhood of Boilermakers (Local One)--says the claims could be worth "billions of dollars."
Specifically, the committee says that since Edison Mission's founding in 1986, it hasn't operated independently with the goal of maximizing value for its own stakeholders but has instead operated as a "controlled division" of Edison International. The parent, according to the committee, exploited its control of Edison Mission to enrich itself and its regulated utility business, Southern California Edison.
The committee alleged that Edison International improperly transferred value away from Edison Mission in a series of transactions, including paying $925 million in dividends to a separate Edison International subsidiary in 2007. Edison Mission was, at the time, allegedly insolvent--that is, unable to pay its debts as they came due.
As Edison Mission's financial situation worsened, the committee said Edison International's shareholders took note. Facing a market that believed the two companies to be "inextricably intertwined," Edison International saw its stock price drop about 41% between June 3, 2008, and June 3, 2009, to $25.46 from $43.47.
By 2012, Edison Mission's financial situation was "hopeless," the committee claimed, so Edison International allegedly made one last "unwarranted" cash withdrawal of $183 million from Edison Mission in September and terminated a valuable tax-sharing agreement between the two companies. Edison Mission filed for bankruptcy protection that December.
"These actions have benefitted EIX and its shareholders while causing significant harm to EME and its creditors," the committee said.
Enabling Edison International's control over Edison Mission, the committee alleged, were the Edison Mission officers and directors who were "solely beholden" to the parent company. The committee said Edison International used its subsidiary as a training ground for employees, comparing the relationship to that between a major and minor league baseball team.
"EIX personnel were routinely sent to EME to serve in senior roles, such as president, before being 'called up' to serve executive roles at EIX or SCE," the committee said. "Pursuant to this overall system, loyalty to EIX--not EME--was assured."
The committee is asking the bankruptcy court to let it sue on behalf of Edison Mission, which the committee says has "numerous" conflicts of interest.
"The committee believes that recoveries on the claims could be in the billions of dollars, and that only a conflict-free fiduciary--unlike the debtors and their counsel--will be able to achieve the most value-maximizing outcome," it said in court papers.
The U.S. Bankruptcy Court in Chicago will consider the committee's request for standing to bring the lawsuit at an Aug. 21 hearing.
The request comes days after Edison Mission's bondholders terminated a preliminary deal pledging their support for the power company's restructuring after the company failed to cement the agreement in time. An attorney for the bondholders couldn't be reached to comment.
Based in Rosemead, Calif., Edison International's subsidiaries generate and distribute electric power. Edison Mission operates coal, gas and wind plants and projects.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)
Write to Jacqueline Palank at jacqueline.palank@wsj.com.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires
August 01, 2013 12:45 ET (16:45 GMT)
Copyright (c) 2013 Dow Jones & Company, Inc.


-------------------------
We have been waiting a long time to bring forth the whole story and some of you may still be a bit mystified about what Barb and I are working on. This article written by the WSJ confirms a lot ...There is much more to come and will state for the record that we are not working for the WSJ or anyone else.


The following article appears at Zero Hedge yesterday.

http://www.zerohedge.com/news/2013-08-19/doj-picks-where-ferc-left-begins-investigation-jpmorgans-enronesque-energy-market-ma


I commented under the moniker 'Lumberjack'. Read the story and comments.
Aug 20, 2013 at 7:36 PM | Registered CommenterJohn
Edison Mission, Chevron Spar Over Fate of Natural-Gas Venture


http://www.nasdaq.com/article/edison-mission-chevron-spar-over-fate-of-natural-gas-venture-20130822-00700#ixzz2cnuxXMkR

[snip]

The war of words between Edison Mission Energy and estranged partner Chevron Corp. ( CVX ) is heating up, with Edison Mission saying Chevron has just one reason--"greed, pure and simple"--to oust it from a gas deal that has brought in billions of dollars over the past three decades.
Chevron, which sued Edison Mission shortly after its bankruptcy filing to remove its partner from the lucrative natural-gas deal, says Edison Mission is using bankruptcy law to ultimately sell its stake and to force an unwanted partner on Chevron, a prospect the oil company finds "abhorrent."
The energy company, meanwhile, says Chevron just wants the venture for itself. "Chevron's motivation...is greed, pure and simple," Edison Mission said in court papers.
Lawyers for both sides squared off in U.S. Bankruptcy Court in Chicago earlier this week in the long-running fight over the fate of their 30-year partnership, which is expected to generate tens of millions of dollars over the next seven years.
At issue is Chevron's natural-gas venture with two Edison affiliates, Southern Sierra Energy Co. and Western Sierra Energy Co. The two energy-company affiliates are partners with Chevron at the Kern River Cogeneration Co. and Sycamore Cogeneration Co. facilities in California. Those plants produce electricity that is sold to California power companies and steam that is sold to Chevron.
Edison Mission says the gas-partnership agreements are executory contracts--that is, a contract under which both parties still have performance obligations remaining. U.S. bankruptcy law allows a debtor to assume or reject such contracts, a typical example being a debtor terminating a money-losing lease...

...Chevron says that the act of Edison Mission's filing for bankruptcy constituted a default by the subsidiaries and that the law limits a company's ability to assume a contract if it actually intends to assign, or transfer, it to someone else.
Edison Mission says it doesn't intend to assign gas partnership agreements. In any event, the affiliates aren't in default because their actual parent, Southern California Edison, hasn't filed for bankruptcy and isn't part of the case.
Aug 23, 2013 at 10:59 AM | Unregistered Commenterjohn
Keep an eye on Chevron.
Mar 6, 2014 at 7:14 PM | Unregistered Commenterjohn

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