JP Morgan Chase has accused 11 insurers of "brazen distortion of the facts" about the US bank's involvement in commodities deals with Enron as it prepares to go to court to recover nearly $1 billion (€1 billion) from the companies.

In a long-awaited civil trial beginning today in New York - the first anniversary of Enron's bankruptcy - JP Morgan will try to convince jurors that the insurers should honour their guarantees on oil and gas contracts between Mahonia, an offshore vehicle, and the energy group.

The insurers have accused the bank of using the Jersey-based vehicle as a conduit for disguised loans to Enron. The Mahonia affair was at the centre of often bitter exchanges in Congress earlier this year when senators grilled JP Morgan about the "pre-pay" transactions.

On Friday the bank said the insurers had agreed their obligation to pay was "absolute and unconditional. Their assertions to the contrary are fabrications and we intend to prove it." A lawyer for the insurers declined to comment ahead of the trial.

The case is the first Enron-related trial since the US government's prosecution of Andersen, Enron's former auditor, in Houston earlier this year. JP Morgan's challenge will be to convince lay people that the deals it arranged for Enron through Mahonia were a normal part of structured finance.

Mr Jed Rakoff, the district court judge, is known for insisting on a swift pace at his trials, and people close to the case say they expect the trial to be wrapped up in three to four weeks.

The insurers include Travelers, Chubb, CNA, Safeco and the St Paul Companies, or their subsidiaries, all of which issued surety bonds to guarantee the deals.

Separately, JP Morgan is trying to recover $165 million from Westdeutsche Landesbank, the German bank, which is refusing to pay on a letter of credit issued for Mahonia just weeks before Enron's downward spiral into bankruptcy began.

A court-appointed committee wants to dock the fees and expenses paid to advisers on the Enron bankruptcy, after identifying errors in their invoices.

Lawyers and restructuring specialists are still struggling to sort out the energy company's complex bankruptcy, filed a year ago today.

But creditors are increasingly concerned about the mounting cost of the case, with some complaining that professional fees are running at $1 million or more a day and eroding the value of the assets. - (Financial Times Service)