Wednesday, March 2, 2016

A Modern Business Tragedy: Chesapeake Energy and Aubrey McClendon

I have long followed the trials and tribulations of Chesapeake Energy and founder Aubrey McClendon, and I had been planning to write about yesterday's indictment of McClendon for bid rigging in a couple weeks, after I gathered more information.  About an hour ago, though, reports broke that former Chesapeake CEO Aubrey McClendon died today.  According to CNBC:

Aubrey McClendon, a founder and former chief executive of Chesapeake Energy, died in a single-car crash Wednesday at age 56, a day after he was charged with conspiring to rig bids for oil and natural gas leases.

McClendon crashed into an embankment while traveling at a "high rate of speed" in Oklahoma City just after 9 a.m. Wednesday morning, said Capt. Paco Balderrama of the Oklahoma City Police Department. Flames engulfed McClendon's vehicle "immediately," and it was burnt so badly that police could not tell if he was wearing a seatbelt, he said.

Before going any further, my thoughts go out to his friends and family.  Regardless of how anything else comes together, their loss is real, and I feel badly for them.  

In years past, I have questioned how Chesapeake conducted some of their business, including their use of entities and their leasing practices in Michigan and whether loan practices McClendon used personally were at odds with his fiduciary duties to Chesapeake.  This round of bid rigging allegations were new to me (a Michigan case settled last year), and I was researching this set of allegations to see what I thought about this case.  I remain curious whether it was a case of "singling him out" unfairly, as he claimed, or were there some strong evidence of more.  

And even if he were being singled out, was it because the practice didn't occur or is it just how everyone did business?  That question remains an open one, even if the case against McClendon is now closed.  I hope to learn more in the coming weeks.   

As to the impact on his former company, CNBC notes
Chesapeake said Tuesday that it did not expect to face criminal prosecution or fines related to McClendon's charges. The company's stock, which was already substantially higher Wednesday, briefly added to gains following news of McClendon's death.
That's a cold reminder that the market (and the news coverage of the market) moves on quickly.  It's good that life continues on, of course, but sometimes reminders of that are still striking.  

https://lawprofessors.typepad.com/business_law/2016/03/a-modern-business-tragedy-chesapeake-energy-and-aubrey-mcclendon.html

Corporations, Joshua P. Fershee, Litigation, White Collar Crime | Permalink

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