Into the fire

Associated Press

HOUSTON — Embattled Enron Corp.’s board on Tuesday selected reorganization expert Stephen Cooper as chief executive to guide it through the largest bankruptcy in history.

The selection came less than a week after the resignation of Kenneth Lay as chairman and chief executive. A search for a new chairman continues, the company said.

Also Tuesday, the board announced the resignation of Lawrence Whalley as president and chief operating officer. Whalley will accept a position with UBS Warburg, the Swiss bank that acquired Enron’s cornerstone trading operation earlier this month, as agreed by the two parties.

Cooper, managing principal of the New York-based reorganization adviser Zolfo Cooper, has been hired as interim chief executive and chief restructuring officer. His task is to lead Enron through its Chapter 11 bankruptcy case amid multiple investigations into the company’s collapse last year.

Zolfo Cooper’s long list of past clients includes instant film maker Polaroid Corp., Hawaiian retailer Liberty House and Spokane-based Pegasus Gold Corp.

The company also said that Jeff McMahon has been promoted from chief financial officer to succeed Whalley as president and chief operating officer. Treasurer Ray Bowen was named vice president and chief financial officer. Both, as members of the Office of the Chief Executive, will fill out Enron’s top management team.

Cooper said the team will immediately start working with Enron’s current management and the creditors’ committee on the company’s efforts to emerge from bankruptcy.

"Our focus is on the future of Enron," Cooper said in a statement. "We will work closely with the board of directors, management and the creditors committee to develop a reorganization plan to maximize value for the company’s stakeholders."

Todd Zywicki, a bankruptcy law professor at George Mason University, said Cooper’s selection appeared to be a small step toward bringing in an outsider unhindered by ties to Enron.

"A lot of this case has been run as sort of an insider’s game among the big banks and the incumbent management at Enron," he said. "The insider’s game is not what this case needs, and it doesn’t seem to be working."

Zywicki said Cooper’s first task will be to instill confidence in the company and its ability to survive bankruptcy, and a first step would be to meet with the 3,000 employees left at the company’s headquarters. An all-employee meeting scheduled last week for a downtown hotel was canceled because company officials wanted to avoid what they anticipated to be a media frenzy, according to an e-mail sent to workers.