A federal bankruptcy judge in New York yesterday denied Enron Corp.'s request to block a lawsuit by a federal agency seeking to take control of the company's pension plans.

The Pension Benefit Guaranty Corp., which acts as a safety net for corporate pension plans, filed a lawsuit in a federal court in Texas in June to take over the plans in a bid to make Enron pay the roughly $320 million owed to former employees under four pension plans.

Enron, once the world's largest energy trader, asked the U.S. Bankruptcy Court in New York to stop the Texas lawsuit from going forward. U.S. Bankruptcy Judge Arthur J. Gonzalez denied the request, saying the PBGC has the right to seek the relief in the Texas court.

At least 5,600 workers lost jobs after Enron disclosed it had hidden billions of dollars in debt in off-the-books partnerships. Enron lost $68 billion in market value from August 2000, when its share price reached its peak. Investors sued Enron to recover $30 billion, alleging accounting fraud. Employee pension funds claim $3 billion in damages.

"We are pleased with the decision and continue to hope that this will not result in PBGC taking over the plans but that Enron will make sufficient contributions to the plan so that no Enron employee loses any benefits," said Jeffrey Speicher, a spokesman for the PBGC.

Houston-based Enron has said it will pay the $320 million owed to the pension plans. The PBGC said the payments should have been made already.

"Enron believes that the decision is unfortunate because it perpetuates needless litigation by the PBGC and jeopardizes creditors' recoveries in light of the fact that Enron has always sought and continues to pay the outstanding obligations," said Brian Rosen, an Enron attorney.

Enron will pay creditors an average of 20 cents on the dollar as part if its plan to exit bankruptcy. Holders of shares, including those in the retirement accounts of Enron employees, will get nothing. The company filed what was then the largest bankruptcy in U.S. history in December 2001. The filing now stands as the second-largest bankruptcy, behind WorldCom Inc.'s 2002 filing.