Published November 12, 2012
NEW YORK – Barclays Bank Plc has won a dismissal of a U.S. lawsuit brought on behalf of creditors of energy transport and storage company SemGroup LP .
The lawsuit had sought repayment of a $143 million fee that SemGroup paid the bank to take over its commodities trading positions before it filed for bankruptcy in 2008.
U.S. District Judge Jed Rakoff in Manhattan issued an order on Friday granting Barclays' motion to dismiss the lawsuit. Rakoff said he will give his reasons for dismissing the lawsuit in a later written opinion.
Brandon Ashcraft, a spokesman for Barclays, declined to comment.
Lawyers for Bettina Whyte, the trustee who brought the lawsuit on behalf of the creditors and a managing director at Alvarez & Marsal, did not respond to requests for comment.
SemGroup filed for bankruptcy in 2008 after incurring $2.4 billion in oil and commodities trading losses, mostly on the New York Mercantile Exchange. The company, based in Tulsa, Oklahoma, emerged from bankruptcy in 2009.
The lawsuit against Barclays, filed in July 2012, stemmed from events leading up to the bankruptcy filing, when SemGroup was seeking to offload its trading book.
As part of that process, SemGroup began talks with Barclays in July 2008 to take over its commodities investments.
According to the trustee's lawsuit, Barclays used its leverage over SemGroup to reject any proposal with terms favorable to the energy company and its creditors.
Instead, Barclays obtained a $143 million novation fee to go through with the deal, the lawsuit said.
Barclays put on what it called its "greedy hat" to extract the fee from a company the bank internally said was in "do or die" mode, according to the lawsuit.
"Under the circumstances, the size of the fee was unconscionable and SemGroup did not receive reasonably equivalent value," the lawsuit said.
The SemGroup trustee alleged that the fee constituted a fraudulent transfer and had to be returned.
Barclays filed court papers in August seeking dismissal of the case. Among other reasons, the bank said the lawsuit was filed two years late.
The case is in Re: Bettina M. Whyte vs Barclays Bank Plc, U.S. District Court, Southern District of New York, No. 12cv5318.
(Reporting by Nate Raymond; Editing by Marguerita Choy and Bob Burgdorfer)