Cities and towns whose costs of trash disposal increased in the wake of the Enron bankruptcy will receive payments resulting from two lawsuits related to that deal.
The Connecticut Resources Recovery Authority Board of Directors today voted to distribute $14.8 million to the 70 cities and towns of its Mid-Connecticut Project. The money comes from two settlements:
• $21 million netted from a settlement with the law firm of Hawkins, Delafield & Wood LLP to settle a suit in which CRRA charged the firm with providing faulty or improper advice with respect to its energy transaction with Enron.
• $2.8 million netted from settlements with other law firms that previously represented Enron or Enron-related entities.
CRRA will use the remaining $9 million to defease the remaining project debt. CRRA sold bonds to finance construction of Mid-Connecticut Project facilities. CRRA’s bond indenture covenants require it to first pay off its debt before rebating funds to towns. In defeasance, money is placed into an irrevocable trust which accumulates interest, and bond payments are debited from that irrevocable trust account.
With these actions, CRRA will in effect have paid off $190 million in bonds, plus $22 million borrowed from the state in the wake of the Enron bankruptcy, in less than four years.
"Ever since the new board took over CRRA in 2002, we have believed the most prudent course of action to benefit our member towns in recovering from the Enron bankruptcy would be to retire our debt. That way, we could assure our towns of stable, predictable disposal fees," said Thomas Kirk, CRRA president. "Having accomplished that, we now have the capacity to return money to our towns."