Citi agrees to pay $1.7B in Enron deal
Settlement marks big victory for creditors of energy firm whose 2001 bankruptcy marked an era in corporate scandal.
NEW YORK (CNNMoney.com) -- Citigroup Inc. said Wednesday that it agreed to pay $1.66 billion in claims to settle a dispute with creditors of Enron, bringing the dramatic tale of the fallen energy giant one step closer to an end.
The settlement, which still requires the approval of a federal bankruptcy judge, marks a major milestone for creditors.
After the company declared bankruptcy in 2001, creditors have pursued nearly a dozen banks, including Citigroup, for their role in the company's bookkeeping acrobatics that led to Enron's collapse. Citi is the last company named in a suit against these major financial institutions to reach a settlement.
"Today's settlement marks an enormous accomplishment for the Enron estate," John Ray III, president and chairman of the board of Enron Creditors Recovery Corp. said in a statement. "I am very proud of the value we have been able to recover on behalf of creditors."
Citigroup said it agreed to the settlement in order to avoid lengthy litigation proceedings, but maintained it had not committed any wrongdoing.
"We are pleased to have reached a successful resolution of the two largest outstanding matters dating from the Enron disputes," the company said in a statement.
Citi added that it would use funds placed previously in a litigation reserve to cover the $1.66 billion settlement.
Maybe most importantly, Wednesday's settlement puts Enron one step closer to returning money to both institutional creditors, the thousands of employees that lost their jobs and bringing to an end this corporate tragedy.
"This puts us monumentally closer to being done," said Harlan Loeb, an Enron spokesperson.
Enron's collapse rocked the nation and was followed by several other high-profile corporate scandals that involved WorldCom, Global Crossing, Adelphia and Tyco. The wave of fraud led to passage of the Sarbanes-Oxley law that tightened oversight of how American companies are audited.
Citigroup (C, Fortune 500) shares fell more than 5% in midday trade on the New York Stock Exchange. 
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