Don't shoot me ... just pointing out the differences. In...

Don't shoot me ... just pointing out the differences.

In Australia, insolvent companies cannot trade. One way to stop trading (on share market) is to apply for suspension. THIS DOES NOT APPLY IN THE USA per se (and hence why it continues to trade on OTC).

Anyone disagree with the above?

Would SSN pass a solvency test?
IMO - No!

Why not?
The "typical" 3 test
1. Cash Flow Test: Corporate insolvency test looks ahead to the future payments and the simple requirement is  can pay bills in the reasonably near future. What I believe weighs heavily is SSN 's statement in Qtrly of "While the Forbearance Agreement has expired, Mutual of Omaha Bank have yet to take action against Samson with respect to the credit facility." FAILS test.

2. Balance Sheet Test: This is pretty clear. Assuming that the Balance Sheet (and last one we have is from 31/12/17) Current Liabilities are of course far higher than Current Assets (courtesy MOB loan). TO BE CLEAR, banks are regulated in the USA by OCC. They have rules - explicit rules - one of which is an EBITDAX test. IMO it is not possible for SSN to get any form of bank lending, hence their statement in Qtryl of "refinancing the facility through a non bank lender". Given debt to equity (at book value as new equity providers could care less what the market value of equity is) ratio, the long-term asset retirement obligations (contingent liability) and the $5M of payables due vs total current assets of $2.8M that a blood red flag. So is the "valuation" applied to Foreman Butte IMO. The US primary test is the balance-sheet test for insolvency and simply defines ‘insolvent’ as a financial condition such that the sum of the debtor’s debts is greater than all of the debtor’s property at a fair valuation. FAILS test

3. Legal Test: Are the outstanding demands for payment? Don't know ... MOB hasn't played the card (yet) but it can anytime. What about the outstanding debtors? Uncertain



IMO the suspension is "protective" for directors to not fall foul of Australian rules re trading while insolvent.

In the US this is not the case. HOWEVER, a subtle shift takes place. While maximising shareholder interests is prime for a (solvent) corporation, for an insolvent corporation creditor interests become prime and take priority over company and shareholder interests. Companies trade (as in continue their business) through "financial difficulties" all the time and some seek the assistance of CH11 which provides debtors (SSN) with protection from creditors (those whom SSN owes money  to) in a legal framework - as in via the courts. Lots of options in and out of court.

Most of the time, the restructure involves "debt-for-equity" swaps and of course dependent on the terms existing equity (current shareholders) will be diluted or DEPENDENT ON COMPANY VALUATION be eliminated altogether (i.e. existing shares are cancelled). Very unlikely MOB participates in any debt for equity swap (and may not even be allowed to) but would look to another DIP financier to pay them.

What is interesting is the role of a "major shareholder" (we just got one of those didn't we). The purpose of CH11 is to get management and its creditors to maximize the value of the company. Shareholders and creditors both retain the right to propose transactions (I wonder what the company's recent major shareholder would propose?).

I wont be surprised by any outcome, including a miracle.

To settle on a financing deal would mean settling on asset valuation which means settling on a company valuation which determines the value of existing equity (including the $1M of equity just tipped in by new major shareholder ... loop back to earlier paragraphs above).