CHICAGO, Sept 9 (Reuters) – SandRidge Energy Inc won court approval for a plan to exit bankruptcy on Friday, overcoming opposition from shareholders who had accused the oil and gas producer of misrepresenting its value.
U.S. Bankruptcy Judge David Jones said he read every letter he received from individual shareholders, some of whom lost their entire savings, when SandRidge filed a prepackaged bankruptcy in May with $4.4 billion of debt.
“I have spent more time than anyone will ever know agonizing over this issue,” Jones said in Houston bankruptcy court after confirming SandRidge’s reorganization plan.
Jones said he understood the pain that comes with losing an investment but was also aware that the reorganization plan was not to blame for the lost equity. “Equity was lost long ago,” he said.
Shares of SandRidge closed at 1 cent on Friday. They had dropped to about 6 cents the day before the company filed for bankruptcy from more than $7 when commodity prices began falling mid-2014.
SandRidge is one of 90 energy companies that have sought Chapter 11 protection in the midst of declining oil and gas prices, lawyers said during a three-day confirmation hearing in Houston.
In a statement, SandRidge said it hoped to emerge from bankruptcy within the next month, eliminating $3.7 billion in pre-petition debt.
Even though it is normal for shareholders to lose their investment during a bankruptcy, SandRidge’s shareholders were hoping to prove its assets were valuable enough so they would recoup some money after repaying creditors.
SandRidge’s financial advisor Houlihan Lokey estimated the reorganized company’s enterprise value at $1.0 billion to $1.3 billion, while an independent analysis commissioned by the shareholders put the value at almost three times that amount.
Oklahoma City-based SandRidge, which was founded in 2006 by former Chesapeake Energy Corp executive Tom Ward, had estimated its assets were worth $7 billion as of March 31, according to its Chapter 11 filing in May.
In a court filing last week, opponents of the company’s reorganization plan mentioned a U.S. Securities and Exchange Commission investigation of a former SandRidge employee who was fired for protesting the company’s improper reporting of its reserve values.
SandRidge could not be reached for comment.
(Reporting by Tracy Rucinski, editing by G Crosse and Bernard Orr)
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