A prominent Tulsa law firm that represented SemGroup LP, its former chief executive, Thomas Kivisto, and Westback Purchasing LLP, the Kivisto-owned trading firm that lost $290 million of SemGroup's money, says creditors of the failed energy company are asking it for too much information.
Hall, Estill, Hardwick, Gable, Golden & Nelson filed papers Thursday asking the U.S. Bankruptcy Court in Wilmington, Del., to block a volley of questions from the official committee of unsecured creditors in SemGroup's Chapter 11 case.
The law firm says SemGroup, Kivisto and Westback have ordered it not to furnish any information to the creditors committee.
Creditors have asked for documents about the firm's work for SemGroup, for Kivisto, and for Kivisto's Westback as they search for reasons for the massive trading losses that took the company down.
"The (creditors') motion is not burdened by concerns for proportion, propriety, or common sense," wrote attorneys for Hall, Estill, complaining of the "enormous burden" of producing documents to the official committee representing SemGroup's unsecured creditors.
The law firm said the creditor's requests were vague. "What does the committee mean by 'trading activities'?" Hall, Estill attorneys wrote.
Michael D. Cooke, the Hall, Estill partner identified as the contact for Westback in public filings and as the contact for SemGroup on deal documents, couldn't be reached for comment Friday. Creditors have asked him to explain his status as Westback's "contact."
The law firm says it finds that request "unintelligible."
Hall, Estill still represents a Kivisto trust and Westback, as well as some SemGroup affiliates not involved in the bankruptcy case, according to the law firm.
Like SemGroup, Hall, Estill's name shows up frequently in connection with charitable causes in Tulsa. As recently as April, the law firm was a leading contributor at a dinner honoring SemGroup, identified in a Tulsa World newspaper article as "one of Tulsa's best friends," with an award for its work for the National MS Society. Also among the top contributors: PricewaterhouseCoopers, SemGroup's auditors.
Now, SemGroup's professionals, advisors and leaders are being peppered with questions from unsecured creditors, who are looking for someone to sue to recoup losses that will be at least $1 billion, and possibly much higher.
SemGroup's private-equity investors, Carlyle Group LP and Ritchie Capital Management, have agreed to voluntarily answer questions from creditors, according to documents filed Friday.
In bankruptcy court documents, creditors say Hall, Estill represented SemGroup in at least one of the insider deals that has drawn the attention of the U.S. Justice Department: SemGroup's sale of its asphalt business to SemGroup Energy Partners LP (SGLP) for $378 million in February.
Federal bankruptcy watchdogs suspect the sale of the asphalt business helped SemGroup cover trading losses. By selling businesses to SemGroup Energy, its public affiliate, SemGroup was able to find cash, at least for a time, Justice Department attorneys suspect.
Creditors want to talk to Hall, Estill about the asphalt-business sale because, at the time of the deal, the firm was also connected to Westback, the Kivisto-owned trading entity responsible for more than 10% of the $2.4 billion that SemGroup ultimately admitted to losing in bad trades, court documents say.
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