Bankruptcy
SemGroup bankruptcy investigation sought by U.S.
The U.S. Justice Department asked that a court examiner investigate SemGroup LP, the oil transporter pushed into bankruptcy by $2.4 billion in energy- trading losses.
The office of the U.S. Trustee, the Justice Department agency that monitors bankruptcies, asked U.S. Bankruptcy Judge Brendan Linehan Shannon in Wilmington, Delaware, to appoint an examiner to investigate the “facts and circumstances” in SemGroup's Chapter 11. Bankruptcy examiners interview witnesses under oath and produce a public report on their findings. They don't have the authority to prosecute criminal cases.
“The dearth of information available regarding the trading strategy” has caused “significant unrest and concern among the debtors' customers, suppliers, lenders and investors,” William K. Harrington, an attorney with the trustee's office, wrote in court papers filed yesterday.
SemGroup, based in Tulsa, Oklahoma, filed for bankruptcy protection last month, blaming a liquidity crisis caused by oil- trading losses and margin-call payments of $1.96 billion. The company said it has assets worth about $6.14 billion and debt of $7.53 billion.
SemGroup's publicly traded SemGroup Energy Partners unit said last month that a federal grand jury ordered it to turn over documents related to liquidity issues at SemGroup. SemGroup Energy Partners also said in a regulatory filing last month that the U.S. Securities and Exchange Commission is investigating the disclosure of those issues in connection with a July 17 press release.
Company attorney Sylvia Mayer didn't return a call seeking for comment.
CEO's Leave
SemGroup's bankruptcy came five days after former Chief Executive Officer Thomas Kivisto took an administrative leave of absence. His leave started one day after the company recognized $2.4 billion in oil-trading losses, SemGroup said in court papers. A trading company controlled by Kivisto, a SemGroup co- founder, owes SemGroup $290 million related to those losses, according to court papers.
The company has said that it plans to sell its assets to pay creditors. Creditors accused SemGroup of "improper trading'' that raised “significant doubt” about the company's ability to continue operating, the U.S. trustee said.
(Published by Bloomberg - august 13, 2008)