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FIs to seek legal opinion vis-a-vis Enron's bankruptcy suit

Indian financial institutions will seek legal opinion to safeguard their interest in Enron's Dabhol Power Company in the wake of the embattled energy major filing a bankruptcy suit as per the US laws.

"Follwing Dynegy's walkout of the proposed merger and Enron planning to file a bankruptcy suit, we are now studying this very Chapter 11 of the US bankruptcy code and how we can deal with the court receiver in case of DPC," a senior FI official told said in Bombay on Thursday.

Meanwhile, Industrial Development Bank of India chairman P P Vora told reporters that Indian lenders will not attend Friday's DPC board meeting and that of global lenders' scheduled in London.

He said the meeting, called to authorise managing director K Wade Cline to issue a final termination notice of the $3 billion project, was "uncalled for and unjust" as the matter was sub judice and the hearing would commence on December 3 onwards.

Asked about the impact on FIs vis-a-vis Dynegy's pullout of the proposed $9 billion merger of Enron, he said, "the matter had become very interesting."

"The entire 85 per cent stake of Enron, GE and Bechtel was pledged to the lenders and all loans were having a security of legal mortgage," he added.

Vora also confirmed that IDBI had received a "third party's" proposal evincing interest in the project. The offer was given in writing to us on November 11 and we would write to them to present us a detailed proposal including the price at which they will like to buy," he added.

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