Tulsa World: SemGroup to present plan

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SemGroup to present plan
A judge will decide if the reorganization plan is acceptable to court and creditors.

By ROD WALTON World Staff Writer
Published: 10/24/2009 2:24 AM
Last Modified: 10/24/2009 5:05 AM

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

Related story: Ex-SemGroup LP exec charged by SEC.

SemGroup LP's date with destiny comes Monday when a judge hears what could be the final arguments about whether the bankrupt Tulsa energy company's reorganization plan is acceptable to court and creditors.

The confirmation hearing in Wilmington, Del., federal court likely will run all day and into the evening. If approved, SemGroup's reorganization plan calls for it to emerge in early November as a publicly traded firm focused on crude oil gathering, storage and transport services.

SemGroup has amended its original reorganization plan several times over the past five months, answering complaints from oil and gas producers and other lienholders. The Tulsa company filed for Chapter 11 bankruptcy in July 2008 after amassing at least $2.4 billion in margin losses on failed oil futures positions.

The slow road back from bankruptcy could hit the fast track next week if U.S. Judge Brendan L. Shannon decides that the plan is feasible. SemGroup plans to offer $2.24 billion in cash and equity to its creditors.

The

biggest stumbling block overcome last month was a settlement with oil and gas producers who sold on credit to SemGroup in the weeks directly preceding and following the Chapter 11 filing. At one point, producers claimed they were owed as much as $1 billion and at least more than $400 million, according to reports.

An intense day-long mediation session on Sept. 20 resulted in the fourth reorganization plan filed two days later. The settlement offered producers up to $337 million for their support.

The Official Producers Committee signed on to the deal, but individual producers have objected to the plan. The committee fought against those objections in a court reply filed Friday.

"The producer settlement provides a meaningful recovery to first purchaser producers," including full payment of claims made on products sold in the 20 days preceding the bankruptcy petition, the OPC reply read. "In addition, the plan ensures that producers will not lose any individual claims and rights they have as against certain downstream parties" in other legal contests.

Former SemGroup CEO Tom Kivisto also has opposed the plan. Kivisto, who co-founded the company and helped grow it into one of the nation's largest private firms within eight years, was placed on leave and later fired amid allegations that he personally guided the disastrous futures trading strategy.

SemGroup filed suit against Kivisto, former chief financial officer Greg Wallace and other executives, alleging misconduct and other misdeeds.

Kivisto's objection focused on how the reorganization plan might affect that lawsuit.

"Specifically, the injunction and releases proposed in the plan strip Mr. Kivisto, and the other defendants, of their defenses, indemnification rights, contribution rights, offset rights, rights under insurance policies and rights against third parties," the objection reads.

Another SemGroup motion filed Friday indicated that Kivisto's deposition in that lawsuit would be Sunday morning at the Tulsa offices of the Conner & Winter law firm. The motion, however, also acknowledged that Kivisto's oral examination could happen at any other agreed time or place.

Kivisto invoked his Fifth Amendment right when he was deposed by the U.S. judge-appointed bankruptcy examiner earlier this year. In April, Examiner Louis Freeh, a former FBI director, filed his investigation report alleging that Kivisto kept SemGroup's risky trading strategy secret and speculative, that Kivisto and Wallace paid themselves millions in improper bonuses and that some of those company officials misled creditors.

The bankruptcy examiner's probe did not have indictment powers. The federal Securities and Exchange Commission and other prosecutors reportedly are still investigating the events leading to SemGroup's fiscal collapse.

Judge Shannon, meanwhile, probably will stay focused Monday on the details surrounding SemGroup's immediate reorganization options. The court hearing could feature testimony from current CEO Terry Ronan, who will step down if and when SemGroup emerges from Chapter 11, and will include a video link with a Canadian court proceeding, since affiliate SemCanada also filed bankruptcy.

The judge could sign off on the plan if creditors approve, or he could add amendments under the idea that SemGroup will still emerge in coming weeks. He also has the power to throw out the plan if creditors also oppose it.

A final judicial option is the "cram-down" option, in which Shannon could move the reorganization forward even if a majority of the creditor classes are not in favor.

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 "Final arguments in SemGroup's reorganization plan begin Monday," which was published on 10/23/2009.

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msfreeh, (10/23/2009 10:15:12 PM)

to view a partial list of crimes committed by FBI agents over 1500 pages long see
forums.signonsandiego. com/showthread.php?t=59139

to view a partial list of FBI agents arrested for pedophilia see
dallasnews. com/forums/viewtopic.php?t=3574

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