Tulsa World: Tax agencies object to Sem reorganization

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Tax agencies object to Sem reorganization
The bankrupt company still owes money, Louisiana and Pennsylvania say.

By ROD WALTON World Staff Writer
Published: 9/5/2009 2:24 AM
Last Modified: 9/5/2009 3:53 AM

Complete coverage: Read all the stories and documents related to the SemGroup collapse.

State tax agencies in Pennsylvania and Louisiana jumped into the fight over SemGroup LP's reorganization this week, objecting to the plan because the bankrupt Tulsa-based energy company still owes them money.

The Louisiana Department of Revenue claims that SemGroup subsidiaries owed more than $420,000 in tax liabilities prior to the company's July 2008 filing for Chapter 11 bankruptcy protection. The objection disputes alleged language in a SemGroup disclosure disallowing interest on claims.

"The Louisiana Department of Revenue does not have authority from the state legislature to waive its right to interest or reduce the interest collected," the objection reads.

SemGroup subsidiaries SemFuel, the refined petroleum division, and SemStream, the natural gas liquids unit, both did business in Louisiana before the bankruptcy. The now-defunct SemMaterials asphalt unit also operated in Pennsylvania, according to reports.

That's state revenue department joined in opposition to the SemGroup amended reorganization plan earlier this week. SemMaterials remitted its sales tax but has not filed partnership tax returns in Pennsylvania since 2005, according to that state's motion.

"Because of the failure to file the delinquent tax returns, the plan should not

be confirmed," the Pennsylvania objection states.

The Oklahoma Tax Commission so far has not joined any opposition to the SemGroup plan. OTC spokeswoman Paula Ross said the commission filed tax claims in the bankruptcy case and expects those will be paid out under the reorganization plan.

Ross did not give a specific dollar figure owed to the OTC by SemGroup. Oklahoma oil and gas producers and royalty owners are owed about $180 million, and the state's gross production tax is 7 percent, according to reports.

SemGroup hopes to emerge from Chapter 11 by the end of this year. The reorganized SemGroup, which hopes to offer $2.26 billion in cash and equity to creditors, could be a publicly traded entity focused on crude oil gathering, storage and transportation services.

The company's first reorganization plan was offered in May but has been amended twice since then.

The amendments offer more money to oil and gas producers and more equity to unsecured lenders, in general.

The current offer sets aside $253 million for producers, including a cash payment if they "opt in" to accept the settlement.

SemGroup's confirmation hearing for its reorganization plan is set for Sept. 16, but both producers and the company are arguing for a later date so the producer payback can be settled. Producers took their fight to the Third Circuit U.S. Court of Appeals after U.S. Bankruptcy Judge Brendan L. Shannon ruled in Wilmington, Del., that banks and other secured lenders held priority claims over the unsecured creditors.

Rod Walton 581-8457
rod.walton@tulsaworld.com By ROD WALTON World Staff Writer

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Some reader comments for this story were copied from "Two states' tax agencies fight SemGroup's plan," which was published on 9/4/2009.

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