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December 20, 2001
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Money > Reuters > Report December 20, 2001 |
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JP Morgan Chase's secured Enron exposure widensJP Morgan Chase & Co, the No 2 US bank holding company, on Wednesday said its stake in bankrupt energy giant Enron Corp that is secured by assets stands at $965 million, or more than double the amount it previously disclosed. Seeking to recoup some of that money, JP Morgan Chase said it has filed lawsuits against several top insurance companies that issued contracts, or surety bonds, guaranteeing Enron assets. JP Morgan Chase's filing shows it has sued insurers including Chubb Corp, CNA Financial Financial Corp and Citigroup Inc's Travelers Property Casualty unit. New York-based JP Morgan Chase is one of several big financial institutions holding investments in the failed energy company that might never be regained. Once high-flying Enron filed for Chapter 11 bankruptcy earlier this month, after questionable financial dealings collapsed the company. JP Morgan Chase -- which has already acknowledged about $600 million in unsecured exposure to Enron -- had previously said its secured stake in Enron "included" $400 million, but did not make public secured amounts beyond that. The surety bonds at the heart of JP Morgan Chase's lawsuits against its insurers were issued to guarantee obligations of Enron North America Corp and Enron Natural Gas Marketing Corp under prepaid forward natural gas and crude oil contracts, JP Morgan Chase said. "At issue in the case is approximately $1.1 billion, of which JP Morgan Chase's share is approximately $965 million," the bank said in a statement. "The litigation seeks a declaration that the insurance companies are required to pay under the bonds." Payment is due December 21, the bank added. In addition, JP Morgan Chase said a "European financial institution" which it did not name has failed to pay it on a $165 million letter of credit backing an Enron-related swap contract. Indicating more legal action, JP Morgan Chase said it "intends to seek enforcement of the letter of credit." Officials from Chubb, CNA and Citigroup could not be reached for comment late Wednesday. ALSO READ:
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