Citigroup said it has reached settlement agreements totaling $1.66 billion with creditors of Enron, the bankrupt energy-trading company.
The settlements resolve the two largest remaining claims against Citi arising out of the collapse of Enron in 2001. Both are fully covered by the bank's existing litigation reserves.
The Enron Bankruptcy Estate had filed bankruptcy and fraud claims against Citi in the U.S. Bankruptcy Court in New York totaling approximately $21 billion. Under the agreement, Enron will release all of its claims against Citi and will allow specified Citi-related claims in the bankruptcy proceeding, including all of the bankruptcy claims of parties holding approximately $2.4 billion of Enron credit-linked notes.
Citi has reached a separate settlement agreement resolving all disputes with holders of the notes, including a suit pending in a Houston federal district court. The Enron settlement agreements still need to be approved by the bankruptcy court.
Lawyers for the Enron creditors filed claims against 11 major banks in 2003 claiming that the banks should share responsibility for the collapse of the company after the exposure of a massive accounting fraud that led to prosecutions of top executives and the loss of thousands of jobs.
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