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Stephen Cooper named Enron Corp interim CEO

Stephen Cooper, the partner in restructuring firm Zolfo Cooper, has been named as the interim chief executive and chief restructuring officer of the fallen energy giant Enron Corp to direct its reemergence from bankruptcy after its spectacular collapse.

However, industry watchers say that Cooper may not succeed in reviving the bankrupt energy firm. But it won't be for lack of trying.

Cooper, a former partner with accounting firm Touche Ross & Co who is now managing principal at New York- and Los Angeles-based Zolfo Cooper, is known as a blunt talker with creative solutions for the most troubled companies.

He made his mark with his role in the wrenching reorganisations of Macy's parent company Federated Department Stores Inc, appliance maker Sunbeam Corp and construction firm Morrison Knudsen. He is also currently vice chairman and chief restructuring officer of Laidlaw Inc, parent of bus company Greyhound.

Cooper was the lead candidate to take over as Enron's acting chief executive and chief restructuring officer, following the resignation of Kenneth Lay as chairman and CEO last week, industry sources said. Cooper could not be reached for comment.

The expected appointment comes amid widespread industry speculation that Enron is more likely to face liquidation than a revival. Although Cooper is not known as "grim reaper" who is brought into simply to sell off assets to pay creditors, the company's choices seem increasingly limited.

Whatever happens, the bankruptcy process is likely to be smoother under Cooper than it has been in the last month under embattled CEO Lay, who resigned under pressure from Enron's unsecured creditors committee, which is charged with negotiating a settlement for Enron's assets.

"This case has very significant challenges," said Richard Cieri, a partner and head of worldwide restructuring at Cleveland law firm Jones Day Reavis & Pogue, who has worked extensively with Cooper. "Steve will bring a lot of integrity and transparency to the process. He does not obfuscate at all."

Some experts said that Cooper may find that liquidation is the only answer for the former trading giant.

"I do think Enron will be liquidated, but the proceeds will add up to about 35 cents on the dollar," said Robert Chambers, a Lehman Brothers distressed debt analyst.

Since Swiss bank UBS Warburg this month agreed to take over Enron's former crown jewel, the Houston-based energy trading operations, there is little reason to hang onto Enron's other units, said Chambers. A liquidation is likely to leave only senior creditors with any of the proceeds of asset sales, including pipelines and utilities in the US, Britain, India and elsewhere, said Chambers. Employee pension plans, shareholders and unsecured creditors could be left with nothing under that scenario.

"It's a collection of disparate assets that don't have a cohesive business strategy," the analyst said. "They are just investments."

While Cooper will have his hands full, he is qualified for the job as a 30-year veteran of corporate reorganisations, according to those who know him.

"Cooper is widely regarded as one of the top gunslingers in the restructuring area," said Hugh Larratt-Smith, principal at Trimingham Americas Inc, a rival crisis management firm. "He has tremendous integrity and the lending community is comfortable with him."

Cooper's choice emerged from a limited pool of top restructuring firms, some of which already have an Enron role and thus could face conflicts in taking on another.

For instance, Blackstone Group is advising Enron on restructuring, while another leading turnaround firm, Houlihan Lokey Howard and Zukin, is advising unsecured creditors. Another major restructuring advisor, Jay Alix & Associates, is advising LJM2, an Enron off-balance sheet partnership that is at the center of allegations over fraudulent bookkeeping at the Houston-based company.

Not all hailed Cooper's likely appointment to Enron, however, with some citing a lack of experience in dealing with energy companies.

"I think they should find someone who understands the business," said one restructuring expert at a major reorganisation advisory firm who asked to remain anonymous. "You can't tell me there aren't some smart people out there who have run energy companies that could do this job."

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