Enron Bankruptcy Essay

968 Words4 Pages
Enron Bankruptcy Enron was an energy trading company that was based in Houston, Texas. The Company was founded in 1985 by Kenneth Lay after merging with Houston Natural Gas and InterNorth. After several years of Enron international and domestic profitability and expansion involving complicated deals and contracts, the company found itself locked into billions of dollars in debt. These debts were concealed from shareholders for many years through partnerships with other companies, fraudulent accounting, and illegal loans. Enron scandal started after hiring of Jeffery Skilling who had created a staff of executives who used accounting loopholes with intentions of poor financial reporting. Through that techniques applied by Mr. Skilling and his executives; they were able to hide billions of dollars in debt from unsuccessful deals and projects. Enron’s Chief Financial Officer Andrew Fastow and many other executives did not only misled the company’s board of directors and auditing committee on higher-risk accounting fraud but they also pressured Arthur Andersen accounting firm to ignore any issues. Through this continued practice by Enron’s executives; the company’s shareholders lost almost $11 billion when high trading Shares Company in mid-2000 traded its shares for less than $1 at the end of November 2001. This gave greater advantage to the rival Houston competitor Dynegy a deal of taking over Enron at what was termed as” a fire Sale price”. Enron scandal comes big disaster and on December 2, 2001; Enron filed bankruptcy under chapter 11 with $63.4 billion in assets which made “it the largest Corporate bankruptcy in American history” before “WorldCom’s bankruptcy”. It seems like every top executives of Enron had played part in it’s’ scandal including the company founder Kenneth Lay. Lay contributed $290,000 toward George W.Bush’s presidential Campaign in September

More about Enron Bankruptcy Essay

Open Document