NEW YORK (CNN/Money) - A group of former Enron Corp. employees, backed by activist Jesse Jackson and the labor union AFL-CIO, won a $28.8 million severance package for about 4,200 laid-off employees of the bankrupt energy trader.
The Enron employment-related issues committee, which represents former employees, said Tuesday that each laid-off worker can get up to $13,500 in payments, less any money they have already received. The New York bankruptcy court, which is overseeing the Enron case, is expected to approve the agreement in July and payments will go out within 30 days of court approval, Richard Rathvon, co-chair of the committee, said.
The laid-off workers have already received about $42 million in severance, Rathvon said. Many employees were paid about $5,600 under Enron's pay package and now could get another $7,900.
The agreement also only covers severance and not issues such as 401(k) or the former employees' stock options, he said.
"The severance agreement announced today offers former Enron employees a real and immediate option to receive an additional cash payment from Enron," Rathvon said. "The agreement eliminates the risk that former employees would receive little or no severance as a result of a lengthy and costly court battle that most could ill afford."
The additional $29 million is far short of the $100 million the laid-off Enron workers asked for in February. Employees who pursue litigation may not get even the $13,500 since they will be considered an unsecured creditor and last in line to get paid in the Enron bankruptcy.
"This is still a victory," Rathvon told CNN/Money. "This settlement gives employees at least this amount with certainty and without the hassles of litigation."
"We 're pleased to have reached a tentative agreement so we may be able to pay additional severance benefits to our former employees," Enron spokesman Mark Palmer added.
Critical employee bonus
Houston-based Enron, once one of the biggest companies in the nation, filed the largest bankruptcy in United States history on Dec. 2. On Dec. 3, the day after it filed for bankruptcy protection, Enron laid off more than 4,000 employees.
Enron allegedly used thousands of off-the-book partnerships to hide nearly $1 billion in debt and to inflate profits.
On the eve of its bankruptcy, Enron paid about $105 million in retention bonuses to critical employees, Rathvon said.
The committee representing the laid-off Enron employees has been authorized to investigate, and to contest where appropriate, the awarding of these bonuses, he said.
"The committee will bring an adversary proceeding in bankruptcy court to have those funds disgorged and get them back," attorney James Beldner, who represents the court-appointed Enron committee, said.
But the Enron committee has little hope of getting the full amount back to the laid-off employees. The panel will also only seek $83 million of the $105 million, since that represents the amount of bonuses paid to employees that no longer work at Enron.
"You will need a crystal ball to get that back," Beldner said.