Shareholders Accuse SandRidge Energy of Understating Assets

by San Antonio Attorney

A group of shareholders has accused bankrupt SandRidge Energy Inc. of extremely understating its value, which may cause a disruption on its prepackaged bankruptcy.

The court filing of shareholders on Aug.  31 comes before the company intends to ask a bankruptcy judge to confirm its reorganization plan.

According to a court filing of shareholders, they are seeking to prove that the oil and gas producer may have an unusual bankruptcy where the assets of a company are valuable enough to pay back creditors and still have money to pay stockholders.

SandRidge submitted a prepackaged bankruptcy deal in May to reorganize about $4 billion of liabilities.  It is one of the many oil-and-gas producers in the United States battered by a drastic decline in energy prices.

Houlihan Lokey, financial adviser of SandRidge, assessed the restructured company’s value, normally an appraisal of market capitalization in addition to debt minus ready money, between $1.0 billion and $1.3 billion.  According to the stockholders, estimation by energy consultant Smith Seckman Reid (SSR) set the value at about thrice that amount.

SSR was unable to present a complete report on its assessment because it had inadequate information from the company and the deadline was Aug.  31, said the shareholders.

SandRidge declared that as of March 31 its assets were valued at $7 billion, as stated on its bankruptcy petition filed in May.

In court documents filed, shareholders attorney Sunil Gupta said he was informed about a U.S.  Securities and Exchange Commission inquiry of a previous SandRidge worker who was terminated for complaining about the company’s erroneous accounting of its reserve values.  According to Gupta, he tracked down the former employee.

A creditor of SandRidge wants the whistleblower to hand over all the papers he submitted to the SEC including the information about the energy company’s reserves.

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