SemGroup back to case studies
Energy transportation, storage, processing and marketing provider
Operations in the U.S., Canada, Mexico and the United Kingdom
Financial derivative trading
Annual revenues of approximately $13 billion

Capstone was retained by Kaye Scholer, as counsel to Bank of America as Agent under the Pre-Petition Secured Credit Agreement, to assist the Pre-Petition Secured Lenders to SemGroup (the “Company”) in evaluating and understanding the Company’s current situation and reported losses resulting from the former CEO’s commodity trading activities, evaluating business operations, and guiding the Secured Lenders through the bankruptcy process.  Pre-petition secured lenders numbered well over 100 institutions at the time of filing, with two types of debt: one secured by the Company’s fixed assets and another secured by the Company’s working capital.

Restructuring Services:

Capstone’s restructuring team provided the following key services during the course of the engagement:

  • Reviewed and approved the development and implementation of an appropriate risk policy that was followed by the Company during the bankruptcy, allowing marketing and trading activities to resume with greater transparency.  As a result, certain business units to continued to operate and maintain business relationships during and after the bankruptcy
  • Analyzed all DIP budgets to mitigate risk of over/under-capitalization.
  • Assisted Company’s advisors in the creation and implementation of the Plan of Reorganization, including decisions to maintain certain business units, while selling and winding down others after efforts to sell the majority of the Company were unsuccessful.
  • Evaluated the Company’s POR and facilitated negotiations of the allocation of distributable value between the two pre-petition secured lender groups.
  • Analyzed the possible sale or liquidation of a number of Sem’s business units.
  • With counsel, successfully negotiated a settlement with the Unsecured Creditors Committee for support of the Company’s POR.
  • Reviewed and approved the Company’s efforts to sell, wind down or maintain specific assets depending upon what was the most appropriate at the time.  Given the situation at the time, a majority of the Company’s assets were maintained as part of the POR.
  • Due to the nature of the business, SemGroup had significant commodity-related claims, including a large number of 503(b)(9) claims.  Capstone, with counsel, helped broker a settlement with the Official Producers Committee, performing extensive analysis on the validity of the 503(b)(9) claims.

 

Outcome:

SemGroup was successfully reorganized and emerged from bankruptcy with Pre-Petition Secured Lenders receiving a total recovery of approximately 66% in the form of cash, notes and equity.

·         Reviewed and approved the development and implementation of an appropriate risk policy that was followed by the Company during the bankruptcy, allowing marketing and trading activities to resume with greater transparency.  As a result, certain business units to continued to operate and maintain business relationships during and after the bankruptcy.

·         Analyzed all DIP budgets to mitigate risk of over/under-capitalization.

·         Assisted Company’s advisors in the creation and implementation of the Plan of Reorganization, including decisions to maintain certain business units, while selling and winding down others after efforts to sell the majority of the Company were unsuccessful.

·         Evaluated the Company’s POR and facilitated negotiations of the allocation of distributable value between the two pre-petition secured lender groups.

·         Analyzed the possible sale or liquidation of a number of Sem’s business units.

·         With counsel, successfully negotiated a settlement with the Unsecured Creditors Committee for support of the Company’s POR.

·         Reviewed and approved the Company’s efforts to sell, wind down or maintain specific assets depending upon what was the most appropriate at the time.  Given the situation at the time, a majority of the Company’s assets were maintained as part of the POR.

·         Due to the nature of the business, SemGroup had significant commodity-related claims, including a large number of 503(b)(9) claims.  Capstone, with counsel, helped broker a settlement with the Official Producers Committee, performing extensive analysis on the validity of the 503(b)(9) claims.