had plummeted. The deal began unraveling two weeks later as Enron revealed even larger financial losses and more debt than previously reported. Dynegy withdrew its merger offer on November 28. Enron sued Dynegy on December 2, the day after Enron declared bankruptcy. (The lawsuit was settled in August 2002 after Dynegy agreed to pay Enron US$25 million for backing out of the deal.) Enron attempted to sell off assets in an effort to stay afloat. On January 3, 2002, Dynegy successfully acquired Enron's Northern Natural Gas Company pipeline. NNGC was Enron's most lucrative pipeline asset and had been put up as collateral in return for Dynegy providing financing to Enron during merger talks. Near-bankruptcy of 2002 Dynegy came close to bankruptcy in 2002. Investor pressure on energy stocks in the wake of the Enron collapse pushed Dynegy's stock price down 42 percent by late April. The company also admitted on April 26 that it made a large accounting error on a fuel contract, which further depressed the stock price 22 percent. Moody's Investors Service announced it was reviewing all US$4 billion of Dynegy debt. In financial distress, Dynegy successfully applied for a US$900 million line of credit. On May 1, the U.S. Securities and Exchange Commission opened a formal investigation into how Dynegy's "Project Alpha", an internal corporate initiative that allegedly inflated income from natural gas transactions and illegally structured business partnerships to avoid income. Two weeks later, the New York Times reported that Dynegy's Illinova subsidiary was part of the investigation. Illinova had formed a joint partnership named Catlin in January 2000 with a little-known investment company named Black Thunder. Catlin took over some of Illinova's electrical generating assets. Although Black Thunder put up almost 90 percent of the money to form Catlin, Dynegy was required to buy out Black Thunder's investment or sell off the assets if Catlin did not earn a specified high rate of return. On May 28, Dynegy founder, president, and chief executive officer Charles Watson resigned. Dynegy Inc. chairman Dan Dienstbier was named interim CEO. In mid-June, Dynegy reported that its first quarter income had fallen 80 percent. It also admitted that it had signed long-term power contracts that would not produce revenue for years to come; but it had charged the income to the current year's revenues in an attempt to bolster its bottom line. On June 19, Dynegy's chief financial office, Rob