What happens if Arthur Andersen is sold? (1 Viewer)

[Brian Perry]

It appears more and more likely that Andersen is not going to survive the Enron debacle. Besides facing bankruptcy, they are exploring the sale of the firm to one of the other Big Five (soon to be Big Four) accounting firms, such as Deloitte & Touche. If this happens, are all the people suing AA out of luck? In other words, can D&T purchase all of the assets and wash its hands of any of AA's legal liability?

 

[Michael Reuben]

In other words, can D&T purchase all of the assets and wash its hands of any of AA's legal liability?

I suspect any sale of AA will turn on the answer to that question. As a general matter, it's always possible to buy just the assets of a company. But if the company is subject to large outstanding liabilities -- and in this case, it's hard to know because AA's Enron liabilities are contingent -- even an asset purchase has risks.

M.

 

[Jason Handy]

Don't analysts do a value analysis when considering a purchase? Assets to liabilities? I am sure some smart weenie has come up with a way to estimate a worst-case scenario for litigation. Personally, I would basically take the 100 million (or 1 billion, whatever that amount was) in overvalue, and apply it directly to the liabilities, assuming the litigation forces the money to be paid back.

But I am just a simple engineer, with no knowledge of the business world!

Jason

 

[Michael Reuben]

Quote:

Sounds like you're talking about Enron. The question was about Arthur Andersen. They aren't the same.
M.

 

[Deane Johnson]

Given the potential magnitude of the liabilities, I should think a likely scenerio might be that AA will be driven into full bankruptcy and someone will buy the assests out of that.

Trouble is, the assets could erode pretty badly going through the bankruptcy, since the greatest assest would be their customer list and which of them will stick around.

Just my uneducated guess.

Deane