WILMINGTON - A U.S. bankruptcy judge ordered Semgroup, its creditors and suppliers to mediation on Wednesday in hopes of keeping the oil and gas services company on track to emerge from bankruptcy in November.
The company has the support of its banks and unsecured creditors for its reorganization plan, which is opposed by the producers who supply Semgroup with oil.
A committee representing the producers filed a motion last week seeking a trustee to run the company, which they said continues to change its reorganization plans and has failed its fiduciary duties by disputing their claims.
I believe that the interests of all parties are best served by attempting to settle, said U.S. Bankruptcy Judge Brendan Shannon. He ordered the parties to mediatation on Sunday with his judicial colleague on the U.S. Bankruptcy Court in Delaware, Kevin Gross.
Shannon admitted it was unlikely that mediation would solve all disputes, which largely center around Semgroup's treatment of the claims for oil that had been shipped, but were not paid for when the company filed for bankruptcy in July 2008.
To get everyone together, progress can be made, Shannon said.
The producers are the final hurdle to having broad support for the company's plan to emerge from bankruptcy. An attorney representing a steering committee of lenders said granting the producers' request for a trustee would put Semgroup in default of its bankruptcy funding, effectively ending the case as a reorganization.
The Tulsa, Oklahoma company named the executives that will lead the company when it emerges from bankruptcy on Tuesday. Semgroup's attorney, Martin Sosland of Weil, Gotshal & Manges, said the executives were negotiating the company's $500 million in financing that would pave its way out of Chapter 11.
The company was the 14th largest private company in the United States when it collapsed last year after losing more than $3 billion on bad bets as oil prices crashed from record highs.
A court-appointed examiner reported earlier this year that the company's top executives lied about its liquidity problems and mismanaged a speculative oil trading strategy.
The company still faces legal action in other courts and it has proposed creating a litigation trust as part of its reorganization.
The case is In re SemCrude LP, U.S. Bankruptcy Court, District of Delaware, No 08-11525. (Editing by Leslie Gevirtz)