After filing for bankruptcy on Tuesday, SemGroup LP’s problems became even worse on Thursday as it was revealed that the Securities and Exchange Commission and the U.S. Attorney’s Office in Oklahoma City are investigating the company’s collapse (see Daily GPI, July 24).

SemGroup LP’s bankruptcy filing produced a fair amount of head scratching from its creditors and subsidiaries after the company reportedly racked up $3.2 billion in trading losses in crude deals on the New York Mercantile Exchange and over-the-counter energy derivative markets.

The privately owned midstream services giant is coming under fire from stockholders of its publicly traded subsidiary SemGroup Energy Partners LP (SGLP). Roy Jacobs & Associates (RJ&A) said it has filed an action in the U.S. District Court for the Southern District of New York on behalf of purchasers of the common units of SGLP from Feb. 20 through July 17 for violation of federal securities laws. The complaint alleges that SGLP’s parent company was “in financial difficulty” or “at high risk for such financial difficulty” as a result of its “investment in risky crude oil hedge transactions,” but hid this from investors in SGLP.

According to an 8-K statement filed by SGLP on Thursday, the SEC is looking to see whether SGLP offered any disclosure about its parent company’s liquidity problems. The U.S. Attorney’s Office wants more information related to the company’s cash flow and debt crisis.

On Wednesday SemGroup said it had received bankruptcy court approval of its essential initial motions requesting relief, including authorization to use cash collateral. The use of cash collateral will enable SemGroup to utilize existing cash and cash generated through normal business operations to meet its obligations post-Chapter 11 filing, including trade payables and wages and benefits, the company said. SemGroup’s bank lenders have also approved the use of cash collateral.

Meanwhile, SemGroup said it is continuing its negotiations with lenders to secure sufficient debtor-in-possession (DIP) financing. The company anticipates obtaining a DIP facility within a week. The court also approved SemGroup’s initial request for $50 million to support its supplier protection program. Under the program, certain suppliers who contractually commit to continue doing business with SemGroup, on the same terms as before the Chapter 11 filing, will be eligible to receive full payment, as due, for goods and services that were delivered before the filing, but for which the supplier has not yet been paid.

In addition, the company received approvals to:

“The approval of these motions will provide critical relief to our employees, customers and suppliers,” said Terry Ronan, acting CEO of SemGroup. “They help ensure that we will be able to operate our business as usual as we undertake our reorganization to maximize value for our creditors.”

Tulsa-based SemGroup provides diversified services for end-users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storage in the United States, Canada, Mexico, Wales, Switzerland and Vietnam. The company said its affiliates in Mexico, the United Kingdom and Asia were not included in the bankruptcy filing.

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