Enron to cut value of assets by $14bn blaming 'possible accounting errors'

In a further blow to the firm's creditors, Enron has said its assets have been substantially overvalued and that it may have to write them down by some $14 billion (€16 billion).

The firm, twisting the knife further into accountants Arthur Andersen, partly blames "possible accounting errors or irregularities" for the mistakes in its $50 billion assets statement in the company's December bankruptcy filing.

While most of the write-off results from bankruptcy, a statement from the firm to the Securities and Exchange Commission said a "material portion" related to accounting problems.

The write-off would probably have happened anyway, Enron says, as the assets relate to business no longer conducted by Enron. And it may also write down a further $8-$10 billion in what it calls "price risk management assets", hedges in its energy business.

The result could be a halving of its stated assets. But Enron has not said it will definitely make the adjustment as a complete restatement of its bankruptcy declaration is not possible at the moment because of litigation, the bankruptcy proceedings and various investigations that are continuing. Since its parting with Arthur Andersen, it has no independent auditor.

The courts have recently given Enron six months to reorganise under legislation that protects firms during the bankruptcy process.