Examiner sought to probe Tulsa-based SemGroup

Published: August 13, 2008

TULSA -- The U.S. trustee overseeing SemGroup LP's bankruptcy case in Delaware has asked a federal judge to appoint an examiner to investigate the Tulsa company's failed oil-hedging practices and several "insider" financial moves that might have funded those trades.

Tuesday's motion by Trustee Roberta A. DeAngelis noted that many creditors are concerned about SemGroup's "dearth of information" concerning an estimated $2.4 billion in trading losses.

The motion also singled out company co-founder and former CEO Tom Kivisto, who accounted for $290 million of SemGroup's losses through his own trading firm.

"Appointment of an examiner to investigate these matters will shed light on these issues and produce a report that informs the court and the public whether culpable conduct occurred," DeAngelis wrote. SemGroup officials have no problem with the request, spokeswoman Brenda Adrian said.

Delaware federal Judge Brendan L. Shannon will hear arguments about DeAngelis' request on Sept. 10.

SemGroup LP, founded eight years ago in Tulsa and recently considered one of the nation's biggest private firms, filed for Chapter 11 bankruptcy protection in Wilmington, Del., on July 22.

Six days earlier, its $2.4 billion account on the New York Mercantile Exchange had been transferred to the Barclay's financial firm because SemGroup lacked adequate cash flow to pay the margin calls, according to reports.

In addition to its $2.4 billion in trading losses, SemGroup LP reportedly owes banks and other creditors about $2.5 billion and suppliers such as well operators an additional $1 billion.

Shannon has allowed the company to use its cash collateral on hand and last week approved an interim $150 million emergency loan so SemGroup can survive long enough to sell off its assets.

SemGroup laid off 110 of its 400 Tulsa workers on Monday.

Copyright 2008 The Associated Press.

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