Lenders' Complaints Prompt Lay to Quit

HOUSTON -- Kenneth Lay resigned Wednesday evening as chairman and chief executive of the Enron Corp. under pressure from outside creditors, nearly two months after his company filed for one of the largest bankruptcies in the history of U.S. business.

Lay, 59, suggested in a statement that he had decided to resign "in cooperation" with the court-appointed creditors committee that is overseeing the bankruptcy proceedings. He said the various federal inquiries into Enron's collapse were too large of a distraction as he tried to resuscitate the company he has led since 1986.

"I want to see Enron survive, and for that to happen, we need someone at the helm who can focus 100 percent of his efforts on reorganizing the company and preserving value for our creditors and hard-working employees," he said in a statement released by the company.

"Unfortunately," he added, "with the multiple inquiries and investigations that currently require much of my time, it is becoming increasingly difficult to concentrate fully on what is most important to Enron's stakeholders."

Lay will remain on Enron's board. The creditors committee is searching for a specialist in reorganizing companies to join Enron and serve as acting chief executive as soon as possible.

Thomas Roberts, a lawyer for Enron in New York, said Lay had been discussing resigning since early December.

Roberts said it was very important that Lay was staying on as a board member, since "he will continue to be available to advise the company."

The resignation of Lay comes after a string of recent revelations that have raised questions about the conduct of Enron's top executives, including Lay himself. Disclosures by congressional investigators have shown that Lay helped create and oversee some of the financial arrangements that helped lead to Enron's collapse. In August, he had been warned in a private memorandum from a company vice president that Enron's accounting practices could bring down the company.

Yet even as he was selling his own shares of Enron stock in September and October, he was reassuring employees that the company would rebound and encouraging them to buy. His lawyer has said Lay was selling not because of lack of confidence in Enron but because he faced margin calls as investments in his personal portfolio declined in value.

Lay will now face intensive scrutiny for his role in Enron's collapse from federal investigators and congressional committees. On the day he resigned, the company he had once helped develop into the largest U.S. energy trader was instead a half-empty tower in which two floors were secured by federal agents.

"He fell on his sword," said John Olson, an energy industry analyst who was a lone skeptic of Enron when it was flying high. "It was probably the right thing to do. Given the climate of opinion in Houston, and where the company is in attempted recovery, this is probably in the best interests of everybody."