The money is coming out of an $11 million death benefit from a policy with Transamerica Occidental Life Insurance Company (AEG). Apparently “a Texas partnership bearing the initials of Lay and his wife, Linda, obtained a life insurance policy for Lay…But under a deal with the company in 1996, the partnership granted Enron the right to a portion of the insurance proceeds in the event
of Lay's death.” The back-story of the $250,000 payment went as follows:
In October 2001, just two months before Enron collapsed into bankruptcy proceedings, the company made a $250,000 premium payment to Transamerica involving Lay's insurance policy, according to court papers. Under bankruptcy law, payments made by a company within 90 days before its bankruptcy filing can be reversed on the grounds that they may be unfair to other creditors.
Enron sued Transamerica in 2003 to get back the premium payment. After Lay died, the company said Transamerica agreed to pay it 100 percent of the October 2001 premium payment owed under Lay's policy. Transamerica has separately also paid Enron $1.25 million from the policy under the terms of the 1996 agreement with the Lay partnership, Enron said.
Doing some simple math it appears Linda Lay will receive $9.5 million from the death benefit proceeds unless she still owes more money as the heir to Kenneth Lays debts.
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