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Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 14-4356

_____________

In re: SEMCRUDE L.P., 

Debtors

BETTINA WHYTE, 

as the Trustee, on behalf of SemGroup Litigation Trust,

Appellant

_____________

On Appeal from the United States District Court

for the District of Delaware

(D.C. Civ. No. 1-13-cv-01375, 1-13-cv-01376)

District Judge: Honorable Sue L. Robinson

______________

Submitted Under Third Circuit L.A.R. 34.1(a)

January 25, 2016

______________

Before: VANASKIE, SHWARTZ, and KRAUSE, Circuit Judges

(Filed: April 28, 2016)

_____________

OPINION*

_____________

 

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 

does not constitute binding precedent.

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VANASKIE, Circuit Judge. 

The Bankruptcy Trustee appeals adverse judgments in actions she brought to set 

aside two equity distributions as constructively fraudulent conveyances. She argues that 

the Bankruptcy Court erred in granting partial summary judgment on her claim that the 

equity distributions, made in August 2007 and February 2008, left the debtor with 

unreasonably small capital, and that the Bankruptcy Court again erred during the trial in 

permitting expert witness testimony on the question of whether the debtor was insolvent 

at the time of the February 2008 equity distribution. Discerning no error in the 

Bankruptcy Court’s rulings, we will affirm. 

I.

We write primarily for the parties, who are familiar with the facts and procedural 

history of this case. Accordingly, we set forth only those facts necessary to our analysis.

SemGroup, L.P. was a “midstream” energy company that filed for bankruptcy in 

July 2008. At one point, SemGroup was the fifth-largest privately held company in the 

United States. SemGroup’s primary business consisted of providing transportation, 

storage, and distribution of oil and gas products to oil producers and refiners. In 

connection with its business, SemGroup also traded options on oil-based commodities.

To maintain its operations, SemGroup depended on credit facilities for capital. 

From 2005 through July 2008, SemGroup had a significant line of credit from a syndicate 

of over 100 different lenders (the “Bank Group”). This line of credit was secured 

pursuant to a Credit Agreement. As a part of this Credit Agreement, SemGroup agreed 

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not to trade “naked options”—trades where the security is neither offset by other trades 

nor backed by physical inventory. Nevertheless, SemGroup’s trading activity involved 

trading naked options, which carried significant risk and was inconsistent not only with 

the Credit Agreement, but also SemGroup’s risk management policy.

In addition to trading naked options, SemGroup made advances to fund trading 

losses incurred by Westback Purchasing Company, L.L.C.—a company owned by 

SemGroup’s CEO and his wife. These advances to Westback were also risky as 

SemGroup made them without charging any interest, securing collateral, or executing 

contracts requiring repayment. 

SemGroup’s trading strategy was predicated on stability in oil prices. Between 

July 2007 and February 2008, however, oil prices were erratic. The price volatility 

resulted in SemGroup having to post large margin deposits, which in turn, compelled 

SemGroup to draw on its credit line. From July 2007 to February 2008, SemGroup’s 

borrowings grew from $800 million to more than $1.7 billion. 

After being informed that SemGroup transferred its trading book in July 2008, the 

Bank Group declared that SemGroup was in default of the Credit Agreement due to its 

substantial losses on options trades in 2007 and 2008.1 After the Bank Group declared 

SemGroup in default, SemGroup filed for bankruptcy on July 22, 2008. On October 28, 

 

1

It does not appear that the Bank Group declared a default based upon the option 

trading strategy pursued by SemGroup or the loans to Westback. Nor does it appear that 

SemGroup attempted to conceal its trading activities or loans to Westback or otherwise 

engaged in fraud.

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2009, the bankruptcy court confirmed a plan of reorganization, which became effective 

on November 20, 2009. The plan created a litigation trust and vested the trust with the 

claims held by the SemGroup estate. 

The court-appointed Trustee commenced two adversary proceedings against 

SemGroup equity holders, seeking to avoid equity distributions approved by SemGroup’s 

management in August 2007 and February 2008.2 The Trustee sought to avoid these

distributions as constructively fraudulent transfers based on two theories: (1) SemGroup 

was left with unreasonably small capital after the equity distributions; and (2) SemGroup 

was insolvent on the date of the 2008 distributions. The bankruptcy court denied the 

unreasonably small capital claim as to the 2007 equity distribution on summary judgment 

and the insolvency claim after a trial. See In re SemCrude, L.P., No. 08-11525 (BLS), 

2013 WL 2490179 (Bankr. D. Del. June 10, 2013). The District Court affirmed, see In re 

Semcrude, L.P., 526 B.R. 556 (D. Del. 2014), and this appeal followed. 

II.

The Bankruptcy Court had jurisdiction over the initial proceedings under 28 

U.S.C. § 1334. The District Court exercised jurisdiction to review the bankruptcy appeal 

 

2

In August 2007, SemGroup distributed approximately $90 million to its equity 

holders, of which about $23 million went to Defendants Ritchie SG Holdings LLC, 

SGLP Holdings, Ltd., and SGLP US Holding, LLC (collectively the “Ritchie 

Appellees”), and $2.8 million went to Appellee Cottonwood Partnership, LLP. In 

February 2008, SemGroup distributed approximately $100 million to its equity holders, 

of which about $26 million went to the Ritchie Appellees and $3 million was paid to 

Cottonwood. Only the distributions to the Ritchie Appellees and Cottonwood are at issue 

in this litigation.

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under 28 U.S.C. § 158(a). We have appellate jurisdiction to review the District Court’s 

ruling under 28 U.S.C. §§ 158(d) and 1291. “We exercise plenary review over the 

District Court’s appellate review of the Bankruptcy Court’s decision and exercise the 

same standard of review as the District Court in reviewing the Bankruptcy Court’s 

determinations.” In re Miller, 730 F.3d 198, 203 (3d Cir. 2013) (internal quotation marks 

and citations omitted). “We review a bankruptcy court’s legal determinations de novo, its 

factual findings for clear error, and its exercises of discretion for abuse thereof.” Id.

(brackets, internal quotation marks, and citations omitted). 

As it pertains to this case, our review of the grant of summary judgment is de 

novo. See In re G–I Holdings, Inc., 755 F.3d 195, 201 (3d Cir. 2014). With respect to 

the trial, only the Bankruptcy Court’s admission of expert witness testimony is at issue.

“We review the decision to admit or reject expert testimony under an abuse of discretion 

standard.” Schneider ex rel. Estate of Schneider v. Fried, 320 F.3d 396, 404 (3d Cir. 

2003) (citing In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 749 (3d Cir. 1994)).

III.

The Trustee seeks to void SemGroup’s 2007 and 2008 equity distributions as

constructively fraudulent transfers pursuant to section 5 of the Oklahoma Uniform 

Fraudulent Transfer Act (“UFTA”), 24 Okla. Stat. Ann. § 116, and the United States 

Bankruptcy Code, 11 U.S.C. § 548. The Bankruptcy Appellate Panel for the Tenth 

Circuit has noted that “the Oklahoma UFTA and § 548 are identical, and cases construing 

the elements under § 548 are persuasive interpretations for the UFTA.” In re Solomon, 

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299 B.R. 626, 633 (B.A.P. 10th Cir. 2003) (footnote omitted).3 Because Section 548 of 

the United State Bankruptcy Code is at issue, and because the parties focus primarily on 

the United States Bankruptcy Code, our analysis will focus on the relevant elements 

under the United States Bankruptcy Code. 

A. The Unreasonably Small Capital Claims

The Trustee contends that both the 2007 and 2008 equity distributions should be 

set aside pursuant to 11 U.S.C. § 548(a)(1)(B)(ii)(II).4 A transaction by a debtor may be 

set aside as constructively fraudulent under this Bankruptcy Code provision if it can be 

shown that the debtor (1) “received less than a reasonably equivalent value in exchange 

for such transfer or obligation;” and (2) “was engaged in . . . a transaction . . . for which 

any property remaining with the debtor was an unreasonably small capital[.]” Id.

5

 The 

 

3 Under the strong-arm provision of the United States Bankruptcy Code, the 

Trustee can also avoid any of SemGroup’s transactions that would be voidable under 

state law. See 11 U.S.C. § 544(b)(1) (granting the power to “avoid any transfer of an 

interest of the debtor in property or any obligation incurred by the debtor that is voidable 

under applicable law by a creditor holding an unsecured claim”).

4 The parties vigorously dispute whether the Trustee waived her unreasonably 

small capital claim with respect to the 2008 distribution. Appellees argue that the 

Bankruptcy Court’s summary judgment ruling only addressed the unreasonably small 

capital claim in the context of the 2007 distribution and the Trustee did not question the 

scope of the Bankruptcy Court’s ruling when the matter proceeded to trial on only the 

2008 distribution. We, however, need not resolve the waiver issue, because the facts 

underlying the unreasonably small capital claims are essentially the same for both 

distributions and the Bankruptcy Court’s rationale for rejecting the claim as to the 2007 

distribution applies with equal force to the 2008 distribution.

5 To void SemGroup’s equity distributions under the Oklahoma UFTA, the 

Trustee was required to demonstrate (1) that SemGroup made the transfers “without 

receiving a reasonably equivalent value in exchange for the transfer” and (2) “was 

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Bankruptcy Court found, and it is undisputed, that the Trustee satisfied the first of these 

requirements because “no reasonably equivalent value was provided” for the equity 

distributions. See In re SemCrude, L.P., 2013 WL 2490179, at *5. Accordingly, the 

dispositive question here is whether, following either equity distribution, SemGroup was 

“left with an unreasonably small capital under the circumstances.” Moody v. Sec. Pac. 

Bus. Credit, Inc., 971 F.2d 1056, 1071 (3d Cir. 1992). 

It is indisputable that, in determining whether SemGroup was left with an 

unreasonably small capital following the equity distributions, the Bankruptcy Court 

properly considered the availability of credit under the Credit Agreement. See id. at 1073 

(“[I]t was proper for the district court to consider availability of credit in determining 

whether [the debtor] was left with an unreasonably small capital.”). There is also no 

dispute that SemGroup was adequately capitalized if it could borrow the amounts 

available to it under the Credit Agreement. Indeed, SemGroup continued to have access 

to the credit facility after each of the equity distributions. What is hotly contested is 

whether SemGroup would have been able to draw on its line of credit if the Bank Group

knew of its allegedly improper trading strategy. 

Pointing to our statement in Moody that “the test for unreasonably small capital is 

reasonable foreseeability,” id., the Trustee argues that SemGroup’s projected reliance 

 

engaged . . . in a . . . transaction for which the remaining assets of the debtor were 

unreasonably small in relation to the business or transaction[.]” 24 Okla. Stat. Ann. § 

116(A)(2)(a).

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upon its continuing ability to draw upon its line of credit was not “reasonable” given that 

its trading strategy was prohibited by the terms of the Credit Agreement. Stated 

otherwise, the Trustee asserts that it was reasonably foreseeable at the time of the equity 

distributions that SemGroup would not have access to its line of credit because its trading 

strategy violated the Credit Agreement. The Trustee argues that there are at least 

questions of fact material to the issue of whether it was reasonably foreseeable that the 

Bank Group would have pulled their line of credit as a result of SemGroup’s derivatives 

trading.

Both the Bankruptcy Court and the District Court reasoned that the Trustee’s 

argument rested upon conjecture biased by hindsight such that it was not reasonably 

foreseeable that SemGroup would lose access to credit when it made the challenged 

equity distributions. See Boyer v. Crown Stock Distrib., Inc., 587 F.3d 787, 794 (7th Cir. 

2009) (“[A] term like ‘unreasonably small’ . . . is fuzzy, and in danger of being 

interpreted under the influence of hindsight bias.”). The Bankruptcy Court explained:

Case law . . . teaches that as a general proposition, hindsight 

should not be used to answer the question of unreasonably 

small capital. . . . Here the availability of the bank facility 

provided the Debtor with actual liquidity sufficient to operate 

its business going forward. There is no material allegation of 

fraud or criminal conduct by [SemGroup], but there is an 

allegation of trading activities that were beyond what was 

permitted under the terms of the bank facility. . . . These cases 

in Bankruptcy Court always present a context of a failed 

business, and there is a temptation . . . to use hindsight to 

establish whether a debtor was adequately capitalized, and . . . 

that’s a temptation to be avoided, because it would 

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improperly expand fraudulent conveyance law far beyond its 

proper borders. . . . 

Here, to accept the plaintiffs’ theory, the Court would have to 

disregard the actual facts of adequate capitalization for 

SemGroup and imagine what would have happened had [its]

trading practices become known to the lenders. And I note 

that the parties dispute whether the speculative trading was 

disclosed. Defendants have offered substantial support that 

the trading in fact was disclosed either in the Debtors’ 

financial reporting, in its footnotes or otherwise, including the 

affiliate transactions that relate to Westback, and the plaintiffs 

similarly contend that it was not sufficiently or adequately 

disclosed or that to the extent it was disclosed that those 

disclosures were countervailed by [SemGroup’s]

representations that it was, in fact, not engaging in speculative 

trading. Regardless of this admittedly live dispute, there is no 

significant allegation of fraud or “cooking the books” by 

SemGroup, and I am exceedingly reluctant to engage in the 

speculative exercise that the plaintiffs propose . . . .

First, I observe that I am dubious, frankly, of the proposition 

that the line would have simply been pulled or that that is 

even the most likely result. There is a range of options, a 

broad range of options from pulling the line, to restructuring 

it, to requiring a sale of assets to pay down a portion of the 

line, to imposing restrictions on the Debtors’ trading activity, 

to simply doing nothing. All of which can be plausibly 

explained or anticipated to have occurred in 2007. And 

because neither I nor anyone . . . can demonstrate which of 

these options would have occurred or would have been . . .

likely to have occurred, I defer to the wisdom of the case law 

that limits the use of hindsight and discourages the 

consideration of later information absent circumstances that 

are not present here. 

(J.A. 42, 44, 45–46, 47.)

The District Court similarly explained:

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There . . . can be no dispute that, at the time of the two 

distributions at issue, SemGroup had a substantial line of 

credit. [The Trustee] maintains in this regard that she at least 

raised a genuine issue of material fact sufficient to withstand 

summary judgment as to “whether it was reasonably 

foreseeable that SemGroup would be unable to sustain its 

operations due to its massive breach of the Credit Agreement”

and the likely termination of the credit facility provided 

thereunder. (D.I. 18 at 10)

It is not clear from the record whether or not the Bank Group 

was aware of the business activities identified by appellant as 

being inconsistent with SemGroup’s obligations under the 

Credit Agreement. As recognized by the bankruptcy court, 

however, it makes no difference. If the Bank Group was 

aware of such, [the Trustee’]s position collapses on itself, for 

there is no forecast to make—SemGroup’s access to credit 

had not been withdrawn at the time of either of the 

distributions despite the “massive” breach of the Credit 

Agreement. If the Bank Group was not aware of such 

activities, one has to engage in multiple levels of forecasting 

in order to embrace [the Trustee’s] position. More 

specifically, in the cases relied on by the parties, the courts 

had the benefit of historical data and of a company’s financial 

projections going forward, the question under Moody being 

whether such future projections were reasonable at the time of 

the event in question (generally a distribution or LBO). Here, 

[the Trustee] would have the court, in effect, forecast (1) the 

lenders’ reaction to discovering the conduct, and then (2) the 

consequences of that reaction, i.e., that the only option chosen 

by all of the lenders would have been to foreclose access to 

all credit, which (3) had the reasonably foreseeable 

consequence of bankruptcy.

I agree with the bankruptcy court that what appellant 

proposes is a “speculative exercise” not rooted in the case 

law.

In re Semcrude, L.P., 526 B.R. at 561.

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We concur with these analyses. Absent the bias of hindsight, it simply cannot be 

said that SemGroup was likely to be denied access to a credit facility that had been in 

place while it was engaging in the allegedly improper trading strategy. Telling in this 

regard is the fact that SemGroup’s trading strategy was not cited by the Bank Group

when they declared a default under the Credit Agreement. As we observed in Moody, the 

test for unreasonably small capital holds debtors responsible “when it is reasonably 

foreseeable that [a company] will fail, but at the same time takes into account that 

‘businesses fail for all sorts of reasons, and that fraudulent [conveyance] laws are not a 

panacea for all such failures.’” 971 F.2d at 1073 (second alteration in original) (quoting 

Bruce J. Markell, Toward True and Plain Dealing: A Theory of Fraudulent Transfers 

Involving Unreasonably Small Capital, 21 Ind. L. Rev. 469, 506 (1988)). In this case, the 

Trustee cannot show that SemGroup could reasonably foresee either that its trading 

strategy would fail or that the Bank Group would declare a default based upon that 

trading strategy. The Trustee presented no evidence that SemGroup tried to disguise its 

trading strategy from the Bank Group or acted deceptively. From SemGroup’s 

perspective, it was acting transparently vis-à-vis the Bank Group in connection with its 

trading strategy. Under these circumstances, it cannot be said that it was reasonably 

foreseeable that its capitalization was unreasonably small because it would lose its ability 

to draw upon its credit facility. Accordingly, the Bankruptcy Court did not err in 

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granting summary judgment in favor of the Appellees on this aspect of the Trustee’s 

constructive fraud claim.6

B. The Insolvency Claim

The Trustee also challenges the 2008 equity distribution as constructively 

fraudulent on the ground that SemGroup was insolvent when that distribution was made. 

Under the United States Bankruptcy Code, the Trustee may void SemGroup’s 2008 

equity distribution if she can demonstrate SemGroup (1) “voluntarily or involuntarily . . . 

received less than a reasonably equivalent value in exchange for such transfer or 

 

6 Appellees argue that we may affirm the Bankruptcy Court’s ruling on the 

unreasonably small capital claim on the alternative ground that the Trustee cannot show a 

causal link between the equity distributions and the adequacy of SemGroup’s 

capitalization. In other words, Appellees assert that the distributions must be the cause of 

undercapitalization. Appellees point out that the premise of the Trustee’s argument is 

that “SemGroup’s derivatives trading, and its purported impact on SemGroup’s access to 

credit, caused SemGroup to lack sufficient capital.” (Ritchie Appellees’ Br. 20.) There 

may be some force to this argument. After all, in Moody, we observed that the concept of 

unreasonably small capital denotes “a standard of causation which looks for a link 

between the challenged conveyance and the debtor’s insolvency.” 971 F.2d at 1071

(emphasis added). Other courts have concluded that the contested transaction must be the 

cause of the small capital condition. See, e.g., In re Terrific Seafoods, Inc., 197 B.R. 724, 

736 (Bankr. D. Mass. 1996) (“I must determine whether the transfer caused [the debtor] 

to engage in business with ‘any property remaining [being] an unreasonably small 

capital.’”) (citing 11 U.S.C. § 548(a)(2)(B)(ii)); In re Pioneer Home Builders, Inc., 147 

B.R. 889, 894 (Bankr. W.D. Tex. 1992) (interpreting the Bankruptcy Code to require that 

“the disputed transfers cause the unreasonably small capital condition.”) (citing 11 

U.S.C. § 548(a)(2)(B)(ii)). The Trustee vigorously disputes the necessity of establishing 

a causal relationship between the challenged distribution and the debtor’s capitalization at 

the time of the distribution. According to the Trustee, the only question is whether the 

debtor was undercapitalized at the time of the distribution, and not what caused that 

status. We, however, need not resolve the question of whether there must be a causal link 

between the challenged transaction and the status of the debtor’s capitalization in this 

case because it cannot be shown that it was reasonably foreseeable at the time of the 

equity distributions that SemGroup would lack adequate access to capital.

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obligation;” and (2) “was insolvent on the date that such transfer was made or such 

obligation was incurred, or became insolvent as a result of such transfer or obligation[.]” 

11 U.S.C. § 548(a)(1)(B)(ii)(I).

As was the case for SemGroup’s 2007 equity distribution, the Bankruptcy Court 

found that “no reasonably equivalent value was provided” for SemGroup’s 2008 equity 

distribution. See In re SemCrude, L.P., 2013 WL 2490179, at *5. After conducting a 

three-day bench trial, exclusively focused on whether SemGroup was insolvent at the 

time of its 2008 equity distribution, the Bankruptcy Court concluded that “the Trustee did 

not carry her burden to prove that [SemGroup] w[as] insolvent when [it] made the 2008 

Distributions.” Id. at *11. On appeal, the Trustee argues that the Bankruptcy Court’s 

holding on this claim should be vacated because it purportedly relied upon inadmissible 

expert witness testimony. Specifically, the Trustee contends that the Bankruptcy Court 

should not have allowed the Appellees’ expert, Michael Lederman, to opine that 

SemGroup was solvent at the time of the 2008 equity distribution because Lederman 

improperly relied upon a June 2008 valuation prepared by Goldman Sachs.

“Under the Federal Rules of Evidence, it is the role of the trial judge to act as a 

‘gatekeeper’ to ensure that any and all expert testimony or evidence is not only relevant, 

but also reliable.” Kannankeril v. Terminix Int’l, Inc., 128 F.3d 802, 806 (3d Cir. 1997) 

(citing Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993)). We have 

explained that the “Rules of Evidence embody a strong preference for admitting any 

evidence that may assist the trier of fact.” Pineda v. Ford Motor Co., 520 F.3d 237, 243 

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(3d Cir. 2008) (citation omitted). In particular, we have explained that Rule 702 “has a 

liberal policy of admissibility.” Kannankeril, 128 F.3d at 806.

“Rule 702 embodies a trilogy of restrictions on expert testimony: qualification, 

reliability and fit.” Schneider ex rel. Estate of Schneider, 320 F.3d at 404. Here, the

Trustee focuses on reliability. Stated concisely, we have explained that in order for

testimony to be reliable, it must be based on appropriate methods and procedures “rather

than on subjective belief or unsupported speculation; the expert must have good grounds

for his o[r] her belief.” Id. (internal quotations and citations omitted). 

Here, the crux of the Trustee’s argument is that Lederman did not have good 

grounds for his testimony because his opinion “was based entirely on a draft June 2008 

valuation created . . . by Goldman Sachs, which Lederman adopted wholesale as his 

opinion without conducting any independent analysis, providing any further input, or 

investigating any of the underlying assumptions.” Appellant’s Br. 51. The Trustee 

correctly notes that in ZF Meritor, LLC v. Eaton Corp., we upheld a finding that an 

expert’s reliance on a business plan was “improper because he did not know either the 

qualifications of the individuals who prepared the [business plan] estimates or the 

assumptions upon which the estimates were based.” 696 F.3d 254, 291 (3d Cir. 2012).

In ZF Meritor, however, we also clarified that, “[i]n some circumstances, an expert might 

be able to rely on the estimates of others in constructing a hypothetical reality, but to do 

so, the expert must explain why he relied on such estimates and must demonstrate why he 

believed the estimates were reliable.” Id. at 292. After conducting a thorough review of 

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the record, we find that this is one of those cases where an expert may rely on the 

estimates of others. As such, we disagree with the Trustee’s contention that this case “is 

indistinguishable from ZF Meritor.” Appellant’s Br. 58. Our disagreement is three-fold. 

First, ZF Meritor is distinguishable because in that case the plaintiff’s expert 

simply “relied on a one–page set of profit and volume projections” to calculate damages.

See 696 F.3d at 292. Here, on the other hand, Lederman utilized the Goldman Sachs 

valuation, which, as the Bankruptcy Court noted, was contemporaneously prepared in 

2008 and not made in anticipation of litigation. Cf. Id. at 292 (“Businesses are generally 

well-informed about the industries in which they operate, and have incentives to develop 

accurate projections.”); Peltz v. Hatten, 279 B.R. 710, 738 (D. Del. 2002) (“[I]n 

determining whether a value is objectively ‘reasonable’ the court gives significant 

deference to marketplace values.”), aff'd sub nom. In re USN Commc’ns, Inc., 60 F. 

App’x 401 (3d Cir. 2003). Buttressing the Bankruptcy Court’s conclusion that the 

Goldman Sachs report was sufficiently reliable for purposes of Lederman’s opinion was 

the fact that it was prepared in anticipation of a contemplated securities offering under

Rule 144A of the Securities Act of 1933. As the Bankruptcy Court noted, Goldman 

Sachs undertook significant due diligence in connection with its valuation efforts that 

“consisted of frequent conversations with SemGroup’s management, access to a data 

room containing documents posted since SemGroup’s credit agreement was originally 

drafted in 2005, and ‘due diligence sessions’ with SemGroup’s management through 

2008.” 2013 WL 2490179, at *10.

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Second, while the Trustee is correct that this case is similar to ZF Meritor insofar 

as Lederman did not know who at Goldman Sachs created the report, see ZF Meritor, 696 

F.3d at 293, this case is still distinguishable because Lederman had previously worked for 

Goldman Sachs. Accordingly, it cannot be said that Lederman did not “know the 

methodology used to create the [Goldman Sachs Report] or the assumptions on which the 

[Goldman Sachs Report’s] price and volume estimates were based.” Id. In other words, 

the Trustee did not show that Lederman “‘lack[ed] . . . familiarity with the methods and 

reasons underlying [Goldman’s projections.]’” Id. (quoting TK–7 Corp. v. Estate of 

Barbouti, 993 F.2d 722, 732 (10th Cir. 1993)). 

Finally, ZF Meritor is distinguishable because Lederman did not simply adopt the 

Goldman Sachs’ evaluation as his own. Instead, Lederman used his own analysis and 

judgment to adjust the Goldman Sachs Report to account for SemGroup’s speculative 

derivative trading by using the Ritchie Appellees’ trading expert, Joseph Graham. As the 

Bankruptcy Court explained, “any effect of unknown speculative trading is adequately 

quantified and adjusted for in Lederman’s valuation, which adopted Graham’s analysis.”

In re SemCrude, L.P., 2013 WL 2490179, at *10. We find it sufficient that Lederman’s 

opinion was grounded on his own analysis and judgment, as supplemented by an analysis 

in the record that was produced by another expert.

In closing, we emphasize that, for admissibility purposes, the proponents of expert 

testimony “‘do not have to demonstrate to the judge by a preponderance of evidence that 

the assessments of their experts are correct, they only have to demonstrate by a 

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17

preponderance of evidence that their opinions are reliable.’” Oddi v. Ford Motor Co.,

234 F.3d 136, 145 (3d Cir. 2000) (quoting In re Paoli R.R. Yard PCB Litig., 35 F.3d at 

744). Under the deferential abuse of discretion standard, we will not disturb a trial 

court’s decision to exclude testimony unless we are left with “‘a definite and firm 

conviction that the court below committed a clear error of judgment.’” ZF Meritor, 696 

F.3d at 293 (quoting In re TMI Litig., 193 F.3d 613, 666 (3d Cir. 1999) (citation 

omitted)). Here, the Trustee does not clear that high hurdle. Because the Goldman Sachs 

Report was a contemporaneous report capturing the marketplace value; Lederman

explained the reasons for his reliance on the Goldman Sachs analysis; and Lederman then 

adjusted the Goldman Sachs valuation based on his own analysis and judgment while 

giving cogent reasons to support his conclusions, we do not find that the Bankruptcy 

Court abused its discretion in admitting Lederman’s expert testimony.

IV.

For the foregoing reasons, the Bankruptcy Court properly entered judgment in 

favor of the Appellees. We will affirm the District Court’s ruling affirming the judgment 

of the Bankruptcy Court. 

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