SandRidge Energy, Inc. (fka SDOCQ)

[Enterprising Investor]

Pre-packaged plans are done for only reason - speedy resolution.

Legal and professional fees can really pile up in a hurry. The rate for most bankruptcy attorneys bill more in one hour than most of us make in an entire day.

I have been involved in one case that started 5/01/09 in which the Trustee has successfully sued and recovered about $56 million. The cost? The nice tidy sum of $36 million. Now, part of those costs should be allocated to a case won but no proceeds have been received due to the pre-judgement interest rate being on appeal and expenses tied to a $1.4B lawsuit in process. Just in case readers get excited about that large windfall, the Special Counsel will get a huge fee when finally resolved. The fee agreement is sealed.

Anyone who has actually reviewed the SDOCQ Plan will notice something like this several times:

Treatment: On the Effective Date or as soon thereafter as reasonably practicable, except to the extent that a Holder of an [fill in the blank] Claim agrees to a less favorable treatment, in full and final satisfaction, compromise, settlement, release, and discharge of and in exchange for each [fill in the blank] Claim...

Creditors accepted less to move things along quickly. If the Plan gets tossed out, then real fighting could begin.

I have been doing this a long time. Equity rarely gets a seat at the table.

56Chevy and I have known each other for years. It is highly unlikely that he is a short seller in this name. You have to put up DOLLARS in equity per share. I found out first hand years ago when I shorted an auto parts company at about $.12 per share in which the old stock was going to be wiped out within a week due to a reorg. Fido called on settlement day and me asked for $50,000 in equity. But, I only shorted 20,000 shares? Yes, the equity requirement was $3 per share. I was sold out. Luckily, the price had already gone down. I was able to keep the profit. And my hand had been slapped.

The smart people were the ones who sold SDOCQ short when it was much higher. If the stock does get wiped out, they do not have to buy it back.