Miller Energy reorganization plan confirmed, SEC settlement approved

By Mark Reccek

Bethlehem, Pa., Jan. 27 – Miller Energy Resources Inc.’s plan of reorganization was confirmed and the company received approval Wednesday by the U.S. Bankruptcy Court for the District of Alaska to enter into a $5 million settlement with the Securities and Exchange Commission, according to an attorney familiar with the case.

Creditor treatment pursuant to the plan includes the following:

• Holders of priority claims will be paid in full;

• Holders of lender secured claims will receive a pro rata distribution of 100% and their pro rata share of new notes in the amount of $60 million, or in such other amount disclosed in the plan supplement;

• Holders of other secured claims will have their claims reinstated, paid in full, collateral surrendered or offset against the claims of debtors;

• Holders of general unsecured claims will receive a pro rata distribution of trust interests with an unsecured cash distribution of $3.5 million subject to the terms of the trust if the class votes to accept the plan, and for lender deficiency claims holders of general unsecured claims will receive a pro rata share of the unsecured cash distribution of $1 million and no creditor trust will be established if the class votes to reject the plan;

• Holders of allowed administrative expenses, professional fee claims, priority tax claims, other priority claims and other secured claims will be paid in full;

• Holders of Miller equity interests will receive no distribution and are deemed to reject the plan; and

• Holders of Miller subsidiary debtor interests will be reinstated and vested in the reorganized company.

Settlement

As previously reported, the settlement involves proceedings instituted against Miller and the company’s former chief financial officer Paul W. Boyd, former chief operating officer David M. Hall and former auditor Carlton W. Vogt III.

According to a previous motion, the SEC alleged Miller overstated the value of acquired oil and gas properties in late 2009 by more than $400 million and failed to follow proper accounting standards.

The settlement provides Miller will do the following:

• Pay a civil penalty of $5 million. Because the plan was confirmed by the bankruptcy court, the $5 million will be treated and paid as an allowed general unsecured claim in class 4 of the plan;

• If the case had been dismissed by the bankruptcy court without confirmation of the plan, or confirmation of any other plan that treats the SEC's civil penalty as a general unsecured claim consistently with other allowed general unsecured claims against Miller, then the civil penalty would have been paid by Miller directly to the SEC in installments of $625,000 within five business days of termination of the cases and three installments of $1,458,333.33 each due no later than the first, second and third annual anniversary of entry of the SEC order;

• Terminate registration of any and all securities with the SEC and suspend any continuing reporting obligations by the earlier of the effective date of the plan or June 30, 2016;

• Cease and desist from committing or causing any violations and any future violations of the Securities and Exchange Act; and

• Cooperate fully with the SEC's staff with respect to producing requested documents, causing current and former employees to be interviewed and causing current and former employees to appear and testify truthfully and completely without notice of subpoena.

Miller Energy is a Houston-based oil and natural gas production company focused on Alaska. The company filed for bankruptcy on Oct. 1 under Chapter 11 case number 15-00236.

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