Enron Corporation was once one of the world’s largest energy companies. In November 2001, Enron revealed that it had overstated its earnings by several hundred million dollars since 1997. The following month, Enron filed for bankruptcy protection. At the time, it was the largest corporate bankruptcy claim in United States history. The financial collapse led to numerous investigations into complicated financial transactions and accounting procedures by both Enron and Arthur Andersen, Enron’s accounting firm. Investigators focused on charges that Enron deliberately concealed its financial problems from investors. Arthur Andersen admitted to destroying documents that might have been significant to the Enron investigations.
Prior to Enron’s downfall, some of the company’s top executives sold their shares of company stock. However, Enron’s employees were not allowed to sell shares from their retirement accounts for several weeks as the stock dropped in value. As a result, thousands of employees lost much of their retirement savings. Many of these employees and other shareholders brought lawsuits against Enron officials, and against Arthur Andersen. In addition, because Enron and some of its executives contributed money to politicians, some people charged that Enron received special treatment from the U.S. government.
In January 2002, Kenneth L. Lay, Enron’s founder, resigned as the company’s chairman. Arthur Andersen’s accounting business collapsed as a result of the scandal. In 2003, government prosecutors indicted 11 former Enron executives on multiple counts of fraud and other charges. Lay and former Enron chief executive Jeffrey Skilling were found guilty of conspiracy and fraud. Lay died while awaiting sentencing. Skilling was sentenced to 24 years 4 months in prison. But he was later resentenced to 14 years, including the 6 years he had already served. Many of the other Enron executives pleaded guilty and received light sentences.
Enron was formed by the 1985 merger of Houston Natural Gas and InterNorth of Omaha, Nebraska. Based in Houston, Texas, Enron evolved from a utility that produced and transported natural gas into a successful energy trading firm. Before its collapse in 2001, Enron was, according to some calculations, the seventh largest U.S. corporation. Enron emerged from bankruptcy in 2004. In 2007, Enron’s name was changed to Enron Creditors Recovery Corporation. The goal of the new company was to repay the old Enron Corporation’s remaining creditors and to end its own operations following the final distribution of payments. From 2004 to 2011, Enron Creditors Recovery Corporation paid more than $21 billion to its creditors. After its final payment in May 2011, the company ceased to exist.
