Creditors for Enron Corp. have asked a court to order the company's former chairman Kenneth Lay and his wife to hand over more than $70 million in loans they received from the bankrupt energy trader, according to a copy of the suit obtained on Monday.
The suit, filed late Friday in the US Bankruptcy Court of Manhattan by a committee of unsecured Enron creditors, alleges that Lay took out loans from Enron and paid them back with Enron stock that was made essentially worthless by its bankruptcy filing.
Lay received numerous reports from within Enron and from outside the company showing the company's financial condition was rapidly deteriorating well in advance of its December 2001 bankruptcy filing, the suit said.
Despite this knowledge, Lay made $74 million of loan repayments within a year of the company's bankruptcy filing, the suit alleged.
Shares of Enron peaked at nearly $90 in 2000, but were trading for pennies after the company filed for bankruptcy protection.
Kenneth Lay, whose wife Linda is also named in the suit, left Enron as chairman and chief executive in January 2002.