💬 [E7028] Enron's collapse provides a canonical case study for identifying corporate fraud red flags: off-balance-sheet SPE structures controlled by insiders (Chewco run by employee Kopper), rapidly deteriorating cash positions masked by trading revenues, and management desperation including attempts to reinstall discredited CEO Skilling. The Justice Department charged 33 individuals including 25 former executives; Skilling received 24+ years, illustrating ultimate accountability for corporate fraud.

💬 [E7029] Enron's December 2, 2001 bankruptcy — then the largest in U.S. history with $38 billion in debt — demonstrates how counterparty contagion accelerates corporate collapse. Trading partners demanding cash collateral created a reflexive liquidity death spiral: reduced volumes demanded more collateral, which further reduced volumes. Arthur Andersen's complicity as auditor destroyed the firm, fundamentally changing corporate accountability standards.

💬 [E7026] Enron's collapse illustrates how off-balance-sheet vehicles (Chewco, LJM1 SPEs) can mask $38 billion in combined on/off-balance-sheet debt. When SPE structures were revealed as improperly consolidated, $586 million in profits (20% of reported earnings 1997-2001) were erased, triggering a liquidity spiral where the company burned $1+ billion monthly and counterparties demanded cash collateral, reducing trading volumes 50%.

💬 [E7027] J.P. Morgan Chase and Citigroup were deeply entangled in Enron's collapse, providing emergency financing while demanding pipeline assets as collateral and exclusive investment banking mandates. The Dynegy $9 billion merger (0.2685 shares per Enron share) collapsed when cash burned through $2.5 billion in days despite bank/Dynegy infusion on November 13, 2001. Creditors ultimately recovered only 53 cents on the dollar after decade-plus proceedings.