EPMI PX Chargeback Complaint

I talked to Jim Huemiller (with LeBoeuf Lamb) who is Enron's bankruptcy
counsel about whether we need to file with FERC a "Suggestion of Bankruptcy"
rather than simply answer the PX's answer.

In a bankruptcy case, there is an automatic stay on actions against the
debtor or the debtor's property. Joe questioned whether the stay applies to
our complaint at FERC because of Section 362(b) of the Bankruptcy code which
excepts from the stay proceedings commenced by governmental units for the
exercise of police and regulatory power.

According to Jim, the Bankruptcy court may oppose a sanction for violation of
the stay. He says there is question of whether Section 362(b) applies to our
complaint because we initiated it, not FERC. I said it could be argued
whether FERC initiated it under the language of Section 206 of the Federal
Power Act. While he agreed there may be legitimate arguments in that regard,
he said that the FERC would want to delay issuing an order until after the
court allowed it to act because its order could be deemed a nullity if it
violated the automatic stay.

He also said that if the PX did not (contrary to its promise) file to except
the FERC's proceeding from the stay, two things could happen. EPMI could
itself file with the bankruptcy court and/or try to get the Court of
establish a trustee in the case. * Apparently, there was a conference call
with Elizabeth Sager and others where it was decided that we needed to file
this "Suggestion of Bankruptcy."

* Since the PX's bankruptcy was filed under Section 11 rather than Section 7
of the bankruptcy code, the PX is still a "debtor in possession" and a
trustee is not appointed unless parties request it and prove that one is
warranted pursuant to the bankruptcy code.