The former chief executive of Enron, jailed for his role in the collapse of the energy giant, could be free before the end of the decade after he was given a shorter sentence as a result of an agreement with prosecutors.

Jeff Skilling, who was originally sentenced to more than 24 years in 2006, was resentenced to 14 years at a court in Houston on Friday.

A federal judge in signed off on an agreement betwee Skilling and federal prosecutors, under which he will drop his appeal and forfeit $40m in assets seized by the government.

Skilling was given the longest sentence of any executive involved in the 2001 collapse of Enron, once one of the world's largest energy companies. The company's fall was one of the biggest business scandals of the decade, costing thousands their jobs and wiping out billions for shareholders and pensioners.

In May 2006, Skilling was convicted on 19 charges including conspiracy, insider trading, securities fraud and making false statements to auditors. US district judge Sim Lake sentenced Skilling to 292 months – more than 24 years – in prison.

The founder of Enron, Kenneth Lay, was also found guilty of multiple counts of conspiracy and fraud. He died of heart failure six weeks after the trial ended.

An appeals court ruled in 2009 that Skilling had been the victim of misapplied sentencing guidelines, a ruling that made inevitable a reduction in his sentence. Skilling's resentencing was delayed for years, however, as he fought to overturn his convictions. He has consistently maintained his innocence.

In 2010 the supreme court ruled one of Skilling's convictions was flawed and that prosecutors had overreached themselves using the "honest services" fraud law. But that decision did not lead to a retrial, as Skilling had hoped. In May prosecutors brokered a deal with Skilling to reduce his sentence in return for the end of his appeals and an agreement to forfeit the seized assets.

Enron's collapse wiped out more than $2bn in employee pensions, $60bn in Enron stock and cost thousands their jobs. The $40m seized by the government will be distributed to victims of Enron's fraud.

"The investigation and prosecution of [Skilling] has been ongoing for more than 10 years," the agreement stated. "The government has invested extraordinary resources into this case during a lengthy investigation, pre-trial litigation, trial and extensive post-trial litigation before the District court, the Fifth Circuit Court of Appeals and the Supreme Court. In the absence of this agreement, the parties anticipate substantial ongoing litigation. By the terms of this agreement, [Skilling's] convictions will become final."