Oklahoma attorneys are plowing through a wealthy energy CEO’s estate to determine whether the heavily indebted billionaire was penniless at the time of his death.
Probate attorneys are sifting through the tangle of financial obligations and financial assets Aubrey McClendon left behind, trying to determine if he died sitting on a mountain of cash or on a burning pile of debt. The former Chesapeake Energy CEO died in a fiery vehicle wreck almost a year-ago today.
The probate case, which is typically used by those who lack the means to determine their own estate, seeks resolution of more than $600 million in claims against McClendon’s troubled estate, according to court records and people familiar with the matter. Nearly $1.1 billion of his estate has been filed so far.
Legal analysts are shocked that McClendon’s case made it to the probate courts.
“It’s remarkable to find a case like this going through probate court,” said David Horton, a law professor at the University of California who specializes in trusts and estates. “One of the first things you do in estate planning is avoid probate.”
The so-called patriarch of the natural gas revolution was facing enormous legal problems before his death. McClendon was speeding well above the posted speed limit before careening off the highway for 189 feet and then slamming into a highway partition Mar. 2. He died instantly.
McClendon was indicted on charges of conspiracy to rig oil prices in Oklahoma a week before his death. The indictment alleged the former oil CEO colluded with another oil company to keep oil and gas bid prices at low levels from 2007 to 2012 as a means of keeping competitors out of the market.
He was facing 10 years in prison and a $1 million fine had the court found him in violation of the Sherman Act, a federal antitrust statute. His death transferred his financial and legal problems onto his complicated estate.
McClendon left a will that failed to address all the aspects of his intricate and exotic oil and gas empire, which is part of the reason why his estate ended up in probate.
Attorneys are licking their chops trying to find ways of recouping hundreds of millions of dollars the CEO left on the table.
“We believe this is an insolvent estate until proven otherwise,” Arthur Hoge III, a lawyer trying to recoup $465 million for a group of Wall Street creditors, told reporters in May. He was responding to questions about whether his clients can hope to recoup their losses.
McClendon’s estate has sold numerous assets, including his Gulfstream G450 jet and 300 acres of property on Lake Michigan, in hopes of climbing out from underneath the energy pioneer’s financial woes.
His creditors are seeing some light at the end of the tunnel thanks to a recent rally in oil prices, which have increased by more than 50 percent from historic lows before McClendon died in 2016. Natural gas prices are up 60 percent.
A dramatic uptick in U.S. production in 2016 likely contributed to his financial downfall. The price of a barrel of oil plummeted from $104.95 in 2014 to $45.24 per barrel only two years later. The average price of oil over that two-year period held steady at $43 per barrel.
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