Federal Judge Postpones Andersen Breakup Request

April 9, 2002

According to a Reuters report, a federal judge has postponed plaintiffs’ request for an injunction to thwart accounting firm Arthur Andersen from selling off its assets.

The delay allows the firm to negotiate a settlement in a slew of civil lawsuits it is currently facing, with the help of a mediator who has been working with both sides for the past couple of weeks.

Insurers asked for the injunction to prevent the company from dissolving, leaving them with nothing to recover. They are seeking losses from their investments in Enron stock.

Andersen served as accountant for energy-trading Enron, until bankruptcy revealed alleged embezzling schemes among top Enron officials.

Andersen is sharing some of the blame, with allegations that they also knew about the doctored bookkeeping. They face a federal indictment for obstruction of justice in their part of purportedly shredding Enron documents, along with numerous lawsuits by Enron investors.

An attorney for Andersen told the judge that an injunction prohibiting the firm from selling assets would worsen the already precarious situation.

Approximately 7,000 employees will be laid off as a result of the negative publicity stemming from the Enron debacle.

A tentative agreement was reached to transfer many of Andersen’s U.S. tax practice partners to rival firm Deloitte & Touche, initiating the firm’s breakup.

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