Yes.  This would be a helpful "insert" in the negotiations manual.  I always 
worry that we receive explanations about a variety of issues and we don't 
keep a written record of the advice received.  SS




Carol St Clair
10/20/99 11:07 AM
To: Mark Taylor/HOU/ECT@ECT, Sara Shackleton/HOU/ECT@ECT, Shari 
Stack/HOU/ECT@ECT, Marie Heard/HOU/ECT@ECT, Tana Jones/HOU/ECT@ECT, Susan 
Bailey/HOU/ECT@ECT, Susan Flynn/HOU/ECT@ECT
cc: Peter Keohane/CAL/ECT@ECT 
Subject: Cash Collateral in Canada

I have spoken with Daivd Mitchell about the issue that I raised in my e-mail 
yesterday regarding which law would govern the "perfection" of our interest 
in cash collateral pledged to Enron North America Corp. by a Canadian 
counterparty and held by us in an account in the US.  David confirmed that 
while a New York/Texas court should apply US law for perfection purposes, 
there is a possibility that a court would say that the law where the pledgor 
is located would govern perfection.  Because of this uncertainty and because 
of the perfection issues under Canadian law regarding cash collateral, do you 
all agree that in our masters involving ENA and a Canadian counterparty that 
Cash is not an acceptable form of collateral?


Peter, 
As I mentioned to you yesterday, with respect to LC's that are issued for our 
benefit, there could be a circumstance where we would draw and hold the cash 
as collateral.  In that circumstance, I think we need some guidnace from you 
and Stikeman as to what we should be doing to perfect our interest in such 
cash.  I would be interested in knowing whether in a bankruptcy context 
involving a Canadian counterparty, whether the court would hold that such 
cash proceeds are property of the estate.

Let me know what you think.  My assistant is trying to set up a call with 
you, me and Shari to go through the other Canadian law issues that I raised 
in my e-mail to you yesterday.

Carol