By Rico Setyo
SemGroup is a energy marketing company that collapsed last year due to the Chief Executive Thomas Kivisto poor decisions of selling unauthorized crude oil options. Upon the collapse, the company filed a Chapter 11 Restructuring to help strengthen the company and prevent it from disappearing from the market. However, according to the court’s records they had estimated obligations of about $9.47 billion to their creditors. In order to reorganize the liabilities and equity side of the balance sheet, they needed to formulate a plan that has to be approved by the courts.
During the Chapter 11 restructuring process, the business continues to operate while the courts oversee its operations. The restructuring ensures that all of the companies secured and administrative creditors are paid back first before any of its shareholders. However, in the actual process there issues that arise with their creditors which jeopardized their chances of court approvals. “The settlements [of the dispute] with the three oil-trading companies are critical, [as stated by] Margot Schonholtz, an attorney for the lenders’ agent, Bank of America Corp.” She also mentioned that without the release of the $122 million, the reorganization plan fails.
Fortunately, SemGroup received court approval on October 26 in a 10 hour hearing for a settlement regarding $122 million that is critical to ending its contentious 15-month bankruptcy. Chapter 11 bankruptcy has been a quite popular option during these rough economic times. Despite the slow recovery many companies are being forced to file for chapter 11 in hopes of saving their organization.
Sources
http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter11.html
http://www.bloomberg.com/apps/news?pid=20601103&sid=arn5X5M6Y2wE
http://www.reuters.com/article/bankruptcyNews/idUSN2516732420091026
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