Stricken former stock market star Enron was last night promised as much as $1.5 billion of emergency financing as it struggled to preserve what was left of its core energy trading operations.
The credit line is believed to have been proffered by two of its main creditors, Citibank and JP Morgan.
The extra funding will allow the company to run a scaled back operation while it tries to resolve its difficulties.
At Enron's first bankruptcy hearing in New York before Judge Arthur Gonzalez, the group was forced to seek approval to pay for software upgrades for its demoralised traders, to ensure delivery of commodities it had already paid for, and to avoid eviction from its new 200,000-square-foot trading floor in Houston.
Mr Jeffrey McMahon, Enron's chief financial officer, said the group was negotiating with three potential trade partners "of impeccable creditworthiness" that could back the trading business.
Confidence in Enron collapsed within weeks of its announcement that it had to write down $1.2 billion of shareholder equity to cover a transaction with an off-balance-sheet partnership.
A decision last week by Dynegy, its smaller rival, to pull out of a rescue bid helped push Enron over the brink into failure, shaking financial markets. On Monday, the group laid off 4,000 more employees.
Judge Gonzalez must decide whether to approve Chapter 11 protection for Enron or liquidate the company because it has insufficient assets to justify a restructuring.
Enron’s lawyers yesterday claimed that Enron's trading book still had "net equity", assuming all outstanding trades were completed, of $6 billion-$7 billion, compared with $12 billion before Enron's crisis of confidence began last month.
Financial Times Service