A recent reorganization plan by Linn Energy has shareholders objecting, believing the plan undervalues shareholder equity by at least $4.7 billion.
In court documents filed with the Houston Bankruptcy Court, a group of equity holders of Linn Energy stock have asked the court to appoint an official committee to represent equity holders' interests, and to not confirm the Plan of Reorganization. The shareholders allege that certain assets are not being revalued at current price levels, thereby severely undervaluing their equity.
The equity holders argue that impairment charges of more than $7 billion were taken by the company when oil and natural gas prices were lower than today's current market prices and need to be revalued. They believe in revaluing the assets at current levels would result in shareholder's equity of more than $4.7 billion and that this equity should be allocated to shareholders in the Plan of Reorganization. The shareholders are calling for the official equity holders committee to be set up so their independent experts can provide the valuation.
Linn Energy LLC and Berry Petroleum Company LLC filed voluntary petitions for restructuring under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas in May 2016.