Hi-Crush founders, execs made fortunes as company failed - Reuters
Aug. 13, 2020 12:59 PM ET|About: HI-CRUSH INC (HCRSQ)|By: Carl Surran, SA News Editor
Five days before declaring bankruptcy, the Hi-Crush (OTCPK:HCRSQ) board granted nearly $3M in bonuses to top executives, one of a series of decisions that allowed execs and founders to rake in tens of millions of dollars as the stock price plunged to pennies, according to a Reuters report.
Since 2014, the board approved $640M in company purchases of three sand mines and other assets in which CEO Robert Rasmus and two co-founders each held a 12.78% stake, grossing the trio a combined $245M.
The founders' windfall from the sand mine deals reflects lax corporate governance in the oil patch that has raised investors' risk, says Ed Hirs, a veteran oil industry manager and an energy fellow at the University of Houston.
Hi-Crush has been one of the leading providers of sand for the Texas fracking boom, but it filed for Chapter 11 bankruptcy a month ago.
Crooked Hi-Crush
Re: Crooked Hi-Crush
No one builds a company expecting to go bankruptcy. The Chapter 11 process is not fun. I do agree that the optics look bad in this story, but Hi-Crush would have survived if not for the pandemic. Lots of oilfield service companies are going bankrupt and they aren't all run by crooks. 99% are run by hardworking people trying to make a living. Several hundred thousand small businesses will not survive this year and millions of people will face personal bankruptcy. Many will commit suicide.
If they really did some crooked stuff it will come out in the bankruptcy process. I just really feel sorry for anyone who has to go through the process, it really sucks.
BTW if the bankruptcy judge finds something wrong with activity heading into Chapter 11 he can order them to payback the money.
My first "gig" after leaving Hess in 2002 was as the court appointed CFO for a 40 year old private upstream company that was forced into Chapter 11 by a series of bad well results and falling natural gas prices. The Chapter 11 process took over 20 months to resolve and the lawyers made the most money. Debt holders should do everything they can to work out something with the companies that owe them money. Very few debt holders come out ahead by forcing bankruptcy.
If they really did some crooked stuff it will come out in the bankruptcy process. I just really feel sorry for anyone who has to go through the process, it really sucks.
BTW if the bankruptcy judge finds something wrong with activity heading into Chapter 11 he can order them to payback the money.
My first "gig" after leaving Hess in 2002 was as the court appointed CFO for a 40 year old private upstream company that was forced into Chapter 11 by a series of bad well results and falling natural gas prices. The Chapter 11 process took over 20 months to resolve and the lawyers made the most money. Debt holders should do everything they can to work out something with the companies that owe them money. Very few debt holders come out ahead by forcing bankruptcy.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group