Business

Oil broker: Bankruptcy fault of SemGroup failure

Central Kansas Crude, one of the largest Kansas creditors caught in the SemGroup bankruptcy last year, has filed for bankruptcy.

In the filing, Central Kansas Crude blamed SemGroup subsidiary SemCrude for its bankruptcy, saying that it couldn't recover from the cash flow problems brought on by the bankruptcy.

According to the filing, the Pratt-based company, which is still operating, has assets of $13.5 million and liabilities of $25.4 million.

Central Kansas Crude acted as a middleman, buying oil from hundreds of small- and medium-sized producers in Kansas, Colorado and Oklahoma. It collected the oil in trucks and delivered it to terminals owned by larger companies, such as SemCrude.

Neither executives from Central Kansas Crude, nor their attorney, returned messages seeking comment left on Friday.

In June and July 2008, Central Kansas Crude collected $25 million worth of oil and delivered a substantial amount of it to SemCrude.

It was never paid, according to the filing. SemGroup declared bankruptcy in Delaware bankruptcy court on July 22, 2008, spawning dozens of lawsuits and many thousands of pages of filings between SemGroup's many subsidiaries and their creditors.

In the filing last week, Central Kansas Crude claims SemCrude owes it $8.5 million.

Central Kansas Crude tried to settle with its creditors without declaring bankruptcy, according to the filing.

It offered to pay 25 percent of what it owed creditors and pay the remainder over five years.

Some creditors agreed, and Central Kansas borrowed from People's Bank of Pratt against its trucks to raise the cash for payments.

But many of the creditors did not agree.

In the filing, Central Kansas said the declining price of oil and the number of creditors who rejected the settlement have forced the company to act as a fee-for-service trucking company, rather than as a broker.

The largest creditors in Kansas include:

Secured claims:

People's Bank, $3.2 million; AGV Corp., Attica, $717,654.

Unsecured claims:

Attica Gas Venture, Attica, $663,448; Bramwell Petroleum, Spivey, $157,590; Chieftain Oil, Kiowa, $3.0 million; Craig Oil, $196,577;

H&W Oil, Munjor, $384,088; Mike Kelso, Chase, $201,377; Klima Well Service, Great Bend $145,240; Klima Oil, Great Bend, $116,163;

Messenger Petroleum, Kingman, $250,052; Molz Oil, Kiowa, $505,182; Kansas Dept. of Revenue, $329,796; R&B Oil & Gas, Attica, $998,145.

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