Message-ID: <5949134.1075840837328.JavaMail.evans@thyme>
Date: Wed, 5 Dec 2001 08:28:57 -0800 (PST)
From: raymond.bowen@enron.com
To: wes.colwell@enron.com, rod.hayslett@enron.com, dave.gunther@enron.com, 
	howard.selzer@enron.com, e..lindsey@enron.com, sally.beck@enron.com, 
	wade.stubblefield@enron.com, e..lindsey@enron.com, 
	mary.perkins@enron.com, keith.marlow@enron.com, 
	james.saunders@enron.com, kim.harris@enron.com, 
	thomas.myers@enron.com, kent.castleman@enron.com, 
	e..sommers@enron.com, tracy.geaccone@enron.com, a..davis@enron.com, 
	wanda.labaume@enron.com, kerry.roper@enron.com, 
	kimberley.nelson@enron.com, terry.west@enron.com, 
	paul.garcia@enron.com, janet.dietrich@enron.com, 
	jim.fallon@enron.com, a..hughes@enron.com, louise.kitchen@enron.com, 
	john.lavorato@enron.com, mike.mcconnell@enron.com, 
	a..shankman@enron.com, christina.valdez@enron.com, 
	esmeralda.hinojosa@enron.com, david.oxley@enron.com, 
	stanley.horton@enron.com, greg.piper@enron.com, 
	w..delainey@enron.com, karen.myer@enron.com, raymond.bowen@enron.com, 
	mary.perkins@enron.com
Subject: New Cash Conrol Process - 2:00 pm Meeting, December 5, 2001 in the
 50th floor Board Room
Cc: shirley.tijerina@enron.com, karen.myer@enron.com, kathy.campos@enron.com, 
	sonnia.reyes@enron.com, christina.valdez@enron.com, 
	marsha.schiller@enron.com, kay.chapman@enron.com, 
	lucy.marshall@enron.com, cindy.stark@enron.com, 
	connie.blackwood@enron.com, tammie.schoppe@enron.com, 
	kimberly.hillis@enron.com, loretta.brooks@enron.com, 
	cathy.phillips@enron.com, jennifer.burns@enron.com, 
	liz.taylor@enron.com, mike.deville@enron.com, julie.clyatt@enron.com, 
	sue.ford@enron.com, tina.spiller@enron.com, greg.whalley@enron.com, 
	jeffrey.mcmahon@enron.com, kenneth.lay@enron.com, 
	marsha.schiller@enron.com
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	lucy.marshall@enron.com, cindy.stark@enron.com, 
	connie.blackwood@enron.com, tammie.schoppe@enron.com, 
	kimberly.hillis@enron.com, loretta.brooks@enron.com, 
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	sue.ford@enron.com, tina.spiller@enron.com, greg.whalley@enron.com, 
	jeffrey.mcmahon@enron.com, kenneth.lay@enron.com, 
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X-From: Bowen Jr., Raymond </O=ENRON/OU=NA/CN=RECIPIENTS/CN=RBOWEN>
X-To: Colwell, Wes </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Wcolwel>, Hayslett, Rod </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Rhaysle>, Gunther, Dave </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Dgunthe2>, Selzer, Howard </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Hselzer>, Lindsey, Mark E. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mlinds1>, Beck, Sally </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Sbeck>, Stubblefield, Wade </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Wstubble>, Lindsey, Mark E. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mlinds1>, Perkins, Mary </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mperkin>, Marlow, Keith </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Kmarlow>, Saunders, James </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jsaunde>, Harris, Kim </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Kharris2>, Myers, Thomas </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Tmyers>, Castleman, Kent </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Kcastle>, Sommers, Jeffrey E. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jsommer>, Geaccone, Tracy </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Tgeacco>, Davis, Rachel A. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Rdavis3>, LaBaume, Wanda </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Wlabaum>, Roper, Kerry </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Kroper>, Nelson, Kimberley </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Knelson4>, West, Terry </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Twest>, Garcia, Paul </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Pgarcia>, Dietrich, Janet </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jdietri>, Fallon, Jim </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jfallon>, Hughes, James A. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jhughes>, Kitchen, Louise </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Lkitchen>, Lavorato, John </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jlavora>, Mcconnell, Mike </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mmccon1>, Shankman, Jeffrey A. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jshankm>, Valdez, Christina </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Cvaldez>, Hinojosa, Esmeralda </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Ehinojos>, Oxley, David </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Doxley>, Horton, Stanley </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Notesaddr/cn=5d54fc1f-7c796798-86256a8c-4ddad1>, Piper, Greg </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Gpiper>, Delainey, David W. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Ddelain2>, Myer, Karen </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Kmyer>, Bowen Jr., Raymond </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Rbowen>, Perkins, Mary </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mperkin>
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Overview

Our bankruptcy filing requires a cultural change in the cash management pro=
cedures of Enron.  Because of our fiduciary obligation to our creditors, we=
 now must move to centralized cash management.  These new procedures will a=
mend our prior policy.  As management of the "Debtor", we should approach e=
ach decision about our business, including cash receipts and disbursements,=
 from the perspective of, "Does this enhance the value of the Debtor's esta=
te?"  This memo addresses the new policies that are to be immediately imple=
mented both for entities in the Chapter 11 reorganization and entities that=
 have not filed.  There will be a meeting Wednesday, December 5, 2001 at 2:=
00 PM in the Board Room on the 50th floor to discuss the new policies. =20

As a debtor-in-possession ("DIP"), we have new cash flow reporting obligati=
ons and we must develop and adhere to a cash flow budget.  Failure to adher=
e could have serious consequences to our DIP financing availability as well=
 as diminish our credibility with the creditors with whom we must negotiate=
 our ultimate exit from Chapter 11 as a reorganized entity.

All Enron business units (not just the ones in bankruptcy) will need to con=
form to these new requirements because additional entities are likely to be=
 included in the bankruptcy filing, and because it is extremely important f=
or Enron management to be able to see the totality of cash flow requirement=
s for the Company. =20

There are special procedures outlined at the end of the memo specifically r=
elating to the business units in bankruptcy (the Debtor business units).

New Processes and Procedures

Until further notice, a newly formed committee, the Cash Flow Management Co=
mmittee (the "Committee"), will meet daily to review and approve daily paym=
ents and 5-day projections for each business unit.  The Committee will be h=
eaded by George Wasaff and will also consist of Ray Bowen, Dave Gorte, Tim =
DeSpain, Bob Butts, Julia Murray and Lisa Mellencamp.  The Committee will b=
e assisted by our financial advisor, Batchelder & Partners and our outside =
counsel, Weil, Gotshal & Manges.  The Committee will review payments only a=
fter approval by the business units.  Business units remain responsible for=
 their own internal approval processes.

George Wasaff will be the Company's "Cash Czar".  His responsibilities will=
 include (i) a review of weekly cash budgets from all business units, (ii) =
presentation of weekly budgets to the Committee for approval, (iii) a revie=
w of daily disbursements for the current and immediately succeeding days an=
d (iv) comparison of actual to budget variances for cash receipts and disbu=
rsements. =20

As outlined in Rick Causey's memo of December 4, 2001, all business units m=
ust provide weekly cash flow projections.  Each week's submission should be=
 accompanied by a sufficiently detailed explanation of any variances betwee=
n budget and actual cash receipts and disbursements for the preceding week.=
 Further details of the exact requirements and format of these projections =
will be provided at the meeting.

All divisions must also provide rolling 5-day cash flow projections through=
 the intranet system by 9:00 am each day.  These 5-day projections must inc=
lude a projection of all cash receipts and disbursements for the subsequent=
 5 business days.  Copies of all supporting documentation should be sent to=
 George Wasaff, Mary Perkins, and Tim DeSpain.  Each business unit will be =
responsible for pre-screening weekly budgets and eliminating any non-essent=
ial payments.  This projection should agree to weekly cash flow projections=
 provided on each Friday for the ensuing calendar week with variances clear=
ly identified.  By working with 5-day rolling projections, we can eliminate=
 the last minute scramble to assure that  the payment is consistent with ou=
r situation.

In order to be eligible for payment, items must appear on the weekly and da=
ily cash flow projections.  Failure to include on both will result in non-p=
ayment.  Since our payments are subject to heightened scrutiny, our general=
 rule is that the practice of same day and manual wires will be discontinue=
d.  In addition, please flag any payments made to related parties as these =
may require separate reporting to the Court.  Any questions on this process=
 should be routed to George Wasaff.

Special Procedures for Debtors (Companies in bankruptcy)

See the attached Exhibit A for a list of the current Debtor Companies.  Add=
itional companies may be added with each having its own petition date.  As =
a general rule, we are legally prohibited from paying any pre-petition liab=
ilities.

The standard for what constitutes pre-petition is:
?=09Were goods delivered to Enron prior to December 2, 2001 (or specific pe=
tition date for entities filing after Dec. 2)?
?=09Were services provided prior to the petition date?
?=09If requests for payment are not clear, the business unit must contact v=
endors and request them to provide an invoice, signed by an officer, statin=
g what portion of the goods or services were delivered pre-petition.
?=09If you are unsure or have any questions, please contact George Wasaff.

You must segregate any pre-petition claims for payment.  In virtually all c=
ases these claims will not appear on the cash disbursement list because we =
are generally prohibited from making payment.  However, the Company does ha=
ve very limited authority to make payment to pre-petition vendors deemed to=
 be "critical".  In order for a pre-petition disbursement to be approved, s=
uch disbursement must:  (1) make sound business and operational sense; (2) =
be mission critical; and (3) there must not be a substitute vendor.  The bu=
siness unit heads will be responsible for ensuring that recommendations to =
the Committee for any disbursements to critical pre-petition vendors meet t=
his test.  The Committee's presumption will be that a vendor is not critica=
l.  If you believe that a pre-petition claim clearly meets the "critical" t=
est, you may submit it as a clearly flagged item, stating your reasons for =
requested payment.  The Committee and corporate management will consider th=
ese recommendations by the business unit.

Internal Controls

We need to reassess internal controls and determine if changes are required=
, especially in light of recent personnel changes.  All internal controls, =
new and existing, will be subject to review by Andrew Parsons.  He will be =
communicating with you regarding his assessment and requirements for any ch=
anges to be made.

I look forward to seeing you this afternoon at the meeting.=20


Exhibit A - Enron Entities that Have Filed

Filed December 2, 2001

1.=09Enron Metals and Commodity

2.=09Enron Corp. (Main Case)

3.=09Enron North America Corp.=20

4.=09Enron Power Marketing, Inc.

5.=09PBOG Corp.

6.=09Smith Street Land Company

7.=09Enron Broadband Services, Inc.

8.=09Enron Energy Services Operations, Inc.

9.=09Enron Energy Marketing Corp.

10.=09Enron Energy Services, Inc.

11.=09Enron Energy Services, L.L.C.

12.=09Enron Transportation Services Company

13.=09BAM Leasing Company

14.=09ENA Asset Holdings, L.P.

Filed December 3, 2001

15.=09Enron Gas Liquids, Inc.

Filed December 4, 2001

16.=09Enron Global Markets, L.L.C.

17.=09Enron Industrial Markets, L.L.C.

18.=09Enron NetWorks, L.L.C.