NEW YORK, March 5 (Reuters) - J.P. Morgan Chase <JPM.N> said on Tuesday a federal court denied its request for immediate payment of $965 million from a group of insurers over natural gas and oil that bankrupt energy trader Enron Corp <ENRNQ.PK> failed to deliver, paving the way for a trial.
"These arrangements now appear to be nothing but a disguised loan -- or at least have sufficient indicia thereof that the court could not possibly grant judgment to the plaintiff," Judge Jed Rakoff wrote in denying summary judgment to the U.S. bank, which is a leading Enron creditor. The judge was not expected to grant summary judgment, but the bank felt it had nothing to lose by making the motion.
J.P. Morgan, seeking to avoid a long trial, wanted a speedy payment from 11 insurers on surety bonds Enron bought to cover delivery of the commodities to two offshore trading units. Enron went bankrupt at the end of last year. Surety bonds pay out when a company fails to finish a project or make a delivery or a scheduled payment.
But the insurers, which include Chubb Corp. <CB.N> and CNA Financial Corp. <CNA.N>, claim the forward sale commodity contracts between Enron and offshore entities Mahonia are nothing but a disguised loan from J.P. Morgan to Enron. Insurers are not allowed to guarantee loans with surety bonds.
"This is a case about a commitment made by the insurance companies and a commitment not honored," J.P. Morgan spokesman Mike Golden said.
((Mary Kelleher, Financial services desk 646-223-6123))



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