Royal Bank of Canada has reached an agreement to settle its part of the so-called MegaClaims lawsuit brought by Enron Corp. against RBC and a number of other financial institutions. The terms of the agreement reflect RBC’s minor role in the dispute.
Under the agreement, RBC will pay Enron US$25 million in cash to settle the claims that have been asserted against the bank and certain members of the RBC Financial Group. Enron will also allow some US$114 million in claims filed against the Enron bankruptcy estate, including a US$50 million claim transferred by RBC that is the subject of a separate proceeding in the bankruptcy court, in exchange for a cash payment to Enron of US$24 million. The agreement resolves all claims between RBC and Enron related to Enron’s bankruptcy case. RBC did not admit any wrongdoing or liability in connection with the agreement.
Other financial institutions involved in the MegaClaims litigation include Barclays PLC; Canadian Imperial Bank of Commerce; Citigroup Inc; Credit Suisse First Boston, Inc.; Deutsche Bank AG; J.P. Morgan Chase & Co.; Merrill Lynch & Co., Inc.; Royal Bank of Scotland; and The Toronto-Dominion Bank.
“We are pleased with this resolution and the opportunity to put this matter behind us on favorable terms,” said Charles M. Winograd, president and chief executive officer of RBC Capital Markets.
The agreement is subject to execution of definitive settlement documentation and approval by the United States Bankruptcy Court for the Southern District of New York. RBC plans to continue to vigorously defend the remaining Enron-related cases against it.