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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
VICTORIA DIVISION
IN RE: §
§ Case No. 16-60040
LINN ENERGY, LLC, et al., § Chapter 11
§ (Jointly Administered)
Debtors. § David R. Jones
ORDER
(Docket Nos. 1408, 1608, 1609 and 1617)
On December 22, 2016, Laurie and Douglas Moga submitted a typed letter requesting the
appointment of “an Equity Holder Committee” to “object to the Plan of Reorganization for many
reasons.” [Docket No. 1408]. Several other letters were received by the Court just prior to the
confirmation hearing echoing the request [Docket Nos. 1608, 1609, 1617]. The central theme
advanced in support of the request is that the debtor’s assets are significantly undervalued. Mr.
and Ms. Moga also point to other smaller chapter 11 cases within this district in which equity
committees were appointed as support for the notion that an equity committee should be
appointed in this case.
As the parties are aware, the Court has previously confirmed an amended plan negotiated
amongst the various creditor constituencies. Although plan confirmation rendered the request
for an equity committee moot, the Court believes that the shareholders that took the time to write
a letter to the Court expressing their concerns deserve an answer.
The appointment of an equity committee is the exception and not the rule. At a
minimum, a party seeking the appointment of an equity committee must produce some evidence
that a possibility exists that equity is entitled to a distribution in the case or that the interests of
justice are served by the appointment of an equity committee. Based on the evidence submitted
to the Court in this case, no scenario exists that places equity “in the money” or that additional
oversight of the process is required. The plan approved by the Court resulted in creditors
receiving far less than one hundred percent of their legitimate claims. To add another layer of
administrative costs to the case would serve as an injustice to all creditors.
The Court is keenly aware that shareholders feel betrayed with the cancellation of their
shares. The Court has read each and every letter submitted by shareholders in this case. Even
the letters that condemn the Court are placed on the public docket for all eternity. The integrity
of the bankruptcy process demands this transparency. While some of the letters received by the
Court are critical the American bankruptcy system, the Court has experience in other
jurisdictions and finds our system to have no equal in the world. The bankruptcy case filed by
Linn Energy and its affiliates did not cause the loss of shareholder value; rather, the bankruptcy
process simply forced recognition that a loss had already occurred.
ENTERED
02/08/2017
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The foregoing words will offer little solace to those investors whose shares were lost. The
Court can only offer its observation that the professionals involved on behalf of the parties in the
case were second to none and that the legal battles throughout the case were vigorous and
exhaustive. If value existed, the Court is confident that it would have surfaced in the process.
For the foregoing reasons, the request for an equity committee is denied.
SIGNED: February 7, 2017.
___________________________________
DAVID R. JONES
UNITED STATES BANKRUPTCY JUDGE
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