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The case of a dead oil and gas mogul has taken a turn that affects an NBA team

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NEW YORK, May 27 (Reuters) - This weekend, the Oklahoma City Thunder stands one game away from clinching a surprising spot in the NBA finals.

But away from the roar of fans and the glare of cameras, another battle involving the basketball team is brewing in a probate courtroom in its home city.

At stake is a roughly 20 percent interest in the Thunder held by Aubrey McClendon, the indebted Oklahoma energy magnate who died in a car crash on March 2.

Some of McClendon's creditors want a say over how the stake will be disposed of by his estate, viewing the basketball team as one of his few assets of value, according to a copy of a transcript from a May 13 hearing in probate court.

The lenders want the stake to be sold for top dollar but fear it will be sold for less than that to McClendon's wife, Kathleen, because she is family, said a lawyer representing a syndicate of banks led by Wilmington Trust that loaned $465 million to a company McClendon founded in 2013, American Energy Partners LP (AEP).

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"We have been advised that Katie McClendon wants to purchase that Thunder interest," said the attorney, Arthur Hoge, in the court transcript reviewed by Reuters.

"If we have a reason to question a sale, because we don't think it's an arm's length fair market value sale ... we should have the right to come address that with the court," he said.

Attorneys for McClendon's estate said the creditors were getting ahead of themselves and should not yet be intervening in the probate process. They said the interest in the Thunder was not for sale at this stage, and any sale would need to satisfy qualifications set by the National Basketball Association.

"We certainly don't want the creditors to think we're going to overreach them, but the assertion that we could sell the Thunder interest without letting you know is absurd," Martin Stringer, an attorney for the estate, said in the transcript.

Hoge did not give a value for the Thunder stake at the probate hearing. When reached by Reuters, he declined to comment beyond what was in the public record.

Forbes valued the Thunder at $950 million in January. Reuters was unable to verify that valuation.

Stringer and an attorney for Kathleen McClendon did not return requests for comment.

BATTLE LOOMS

McClendon co-founded Chesapeake Energy Corp in 1989 and turned it into the second-largest natural gas driller in the United States before he stepped down as chief executive in 2013.

The U.S. fracking pioneer left behind a web of business interests made up of more than 180 limited liability companies, partnerships and corporations. Low oil and gas prices have pressured the value of many of his assets.

The lenders that bankrolled some of McClendon's oil and gas businesses said in probate court that they believe his estate is likely insolvent. Besides the $3 million McClendon had in a cash account, the Thunder stake may be his most valuable asset, they said.

Attorneys for McClendon's estate said the creditors' assertion that the estate was insolvent was "just incorrect."

"It depends on commodity prices," among other factors, Stringer said in the transcript.

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The fight over the Thunder stake sets the stage for a highly complex and contentious probate proceeding. Hoge compared it to a bankruptcy, where the court's chief role is to protect the interest of creditors. He said Wilmington Trust was the most significant creditor in the case.

"This is a most unusual estate," said judge Richard Kirby, according to the transcript.

The banks that originally backed the $465 million loan to AEP, personally guaranteed by McClendon, include Goldman Sachs, Jefferies & Co, Morgan Stanley and Credit Suisse, according to Thomson Reuters data. Representatives for these banks declined to comment.

Before McClendon, 56, died he had been forced by financial pressures to part with some of his oil and gas interests, one of his best sources of cash. His biggest investor was abandoning him and he had just agreed to settle a legal claim that chipped at his reputation, Reuters reported in March.

McClendon had used his interest in the Thunder to personally guarantee a loan from private investment firm Oaktree Capital Management LP to a subsidiary of AEP, according to a person familiar with the matter.

Beyond the Thunder stake and the minority interests in the AEP spin-off companies, the identities of many of the other assets are not publicly known because the probate court granted the estate a waiver on inventorying and valuing them, according to court records.

The attorneys for McClendon's estate argued that making the assets public now could hurt the estate, according to the court transcript.

THUNDER ROILS

McClendon worked on revitalizing Oklahoma City over the last decade, helping bring the NBA team to the city from Seattle in 2008. The Thunder has thrived in Oklahoma, nearly tripling in value since 2012, according to Forbes. (http://reut.rs/1QUfnHp)

Clayton Bennett, a close friend of McClendon, is the chairman of the Professional Basketball Club LLC, which owns the Thunder. McClendon owned about 20 percent of the LLC.

Bennett and the NBA did not immediately return requests for comment. A spokesman for the Thunder, Dan Mahoney, declined to comment.

Tom Blalock, chief legal officer of AEP, is the executor of McClendon's estate after both McClendon's wife and Scott Mueller, chief financial officer of AEP, passed on the job.

Hoge said Blalock's two roles could be a potential conflict of interest. One of Blalock's attorneys, Stringer, said he would go before the court to resolve any conflicts, according to the transcript. Blalock could not be reached for comment.

SEE ALSO: Rookies lead Penguins to Stanley Cup Final

AEP did not return a request for comment. The company, founded by McClendon after he left Chesapeake, announced its plans to close this month. AEP is working with restructuring attorneys.

The bank group led by Wilmington Trust has also hired restructuring attorneys and is working with financial advisors. The group recently demanded immediate repayment of the $465 million loan, according to people familiar with the matter. Under the terms of the loan, his death represented a default.

Wilmington Trust did not return a request for comment.

The move to accelerate the loan allows the group to file a claim against McClendon's estate, according to a person familiar with the matter. After a noticing period, the probate court will accept claims from creditors detailing what the estate owes them.

Stringer and the other attorneys for the estate have bristled at the intervention of the creditors in the probate court.

"We recognize that there's a lot of money owed potentially out there. But creditors have specific times they can come into a probate," said Mark Malone, an attorney for the estate, according to the transcript. "I don't say this with my club to say, 'We hate you and go away.' It is more ... we need to be able to do what we need to be able to do." (Reporting by Jessica DiNapoli; Additional reporting by Joshua Schneyer in New York and Terry Wade in Houston; Editing by Carmel Crimmins and Tiffany Wu)

- By Jessica DiNapoli

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The case of a dead oil and gas mogul has taken a turn that affects an NBA team
BOSTON, MA - APRIL 22: Jonas Jerebko #8 of the Boston Celtics and Evan Turner #11 react after a foul was called against Turner during the fourth quarter of Game Three of the Eastern Conference Quarterfinals during the 2016 NBA Playoffs against the Atlanta Hawks at TD Garden on April 22, 2016 in Boston, Massachusetts. The Celtics defeat the Hawks 111-103. NOTE TO USER User expressly acknowledges and agrees that, by downloading and or using this photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Maddie Meyer/Getty Images)
TORONTO, ON - MAY 21: LeBron James #23 of the Cleveland Cavaliers reacts after being hit in the face by teammate Tristan Thompson #13 during the first half against the Toronto Raptors in game three of the Eastern Conference Finals during the 2016 NBA Playoffs at Air Canada Centre on May 21, 2016 in Toronto, Canada. (Photo by Tom Szczerbowski/Getty Images)
TORONTO, ON - MAY 11: DeMarre Carroll #5 of the Toronto Raptors shoots the ball and is fouled by Josh McRoberts #4 of the Miami Heat in the first half of Game Five of the Eastern Conference Semifinals during the 2016 NBA Playoffs at the Air Canada Centre on May 11, 2016 in Toronto, Ontario, Canada. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Vaughn Ridley/Getty Images)
LOS ANGELES, CA - APRIL 27: Damian Lillard #0 of the Portland Trail Blazers scores on a dunk in a 108-98 win over the Los Angeles Clippers during Game Five of the Western Conference Quarterfinals during the 2016 NBA Playoffs on April 27, 2016 in Los Angeles, California. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this Photograph, user is consenting to the terms and condition of the Getty Images License Agreement. (Photo by Harry How/Getty Images)
OAKLAND, CA - MAY 11: Stephen Curry #30 of the Golden State Warriors reacts after making a three-point basket in the first quarter against the Portland Trail Blazers during Game Five of the Western Conference Semifinals during the 2016 NBA Playoffs on May 11, 2016 at Oracle Arena in Oakland, California. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Ezra Shaw/Getty Images)
INDIANAPOLIS, IN - APRIL 29: Myles Turner #33 of the Indiana Pacers celebrates during the 101-83 win over the Toronto Raptors in game six of the 2016 NBA Playoffs Eastern Conference Quarterfinals on April 29, 2016 in Indianapolis, Indiana. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Andy Lyons/Getty Images)
ATLANTA, GA - APRIL 26: Mike Scott #32 of the Atlanta Hawks battles under the basket against Jae Crowder #99 of the Boston Celtics in Game Five of the Eastern Conference Quarterfinals during the 2016 NBA Playoffs at Philips Arena on April 26, 2016 in Atlanta, Georgia. NOTE TO USER User expressly acknowledges and agrees that, by downloading and or using this photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Kevin C. Cox/Getty Images)
TORONTO, ON - APRIL 26: Norman Powell #24 of the Toronto Raptors dunks the ball late in the second half of Game Five of the Eastern Conference Quarterfinals against the Indiana Pacers during the 2016 NBA Playoffs at the Air Canada Centre on April 26, 2016 in Toronto, Ontario, Canada. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Vaughn Ridley/Getty Images)
PORTLAND, OR - APRIL 23: Damian Lillard #0 of the Portland Trail Blazers drives to the basket on DeAndre Jordan #6 of the Los Angeles Clippers in the third quarter of Game Three of the Western Conference Quarterfinals during the 2016 NBA Playoffs at the Moda Center on April 23, 2016 in Portland, Oregon. The Blazers won the game 96-88. NOTE TO USER: User expressly acknowledges and agrees that by downloading and/or using this photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Steve Dykes/Getty Images)
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CLEVELAND, OH - APRIL 17: LeBron James #23 of the Cleveland Cavaliers drives Reggie Jackson #1 of the Detroit Pistons during the second quarter of the NBA Eastern Conference Quarterfinals at Quicken Loans Arena on April 17, 2016 in Cleveland, Ohio. The Cavaliers defeated the Pistons 106-101. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Jason Miller/Getty Images)
TORONTO, CANADA - APRIL 16: Myles Turner #33 of the Indiana Pacers goes up to shoot against Patrick Patterson #54 of the Toronto Raptors in Game One of the Eastern Conference Quarterfinals during the 2016 NBA Playoffs on April 16, 2016 at the Air Canada Centre in Toronto, Ontario, Canada. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and/or using this photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory copyright notice. (Photo by Tom Szczerbowski/Getty Images)
SAN ANTONIO, TX - APRIL 17:Boris Diaw #33 of the San Antonio Spurs battles JaMychal Green #0 of the Memphis Grizzlies for a rebound in Game One of the Western Conference Quarterfinals during the 2016 NBA Playoffs at AT&T Center on April 17, 2016 in San Antonio, Texas. NOTE TO USER: User expressly acknowledges and agrees that by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Ronald Cortes/Getty Images)
BOSTON, MA - APRIL 28: Jae Crowder #99 of the Boston Celtics reacts after receiving his 6th personal foul against the Atlanta Hawks during the fourth quarter of Game Six of the Eastern Conference Quarterfinals during the 2016 NBA Playoffs at TD Garden on April 28, 2016 in Boston, Massachusetts. The Hawks defeat the Celtics 104-92. NOTE TO USER User expressly acknowledges and agrees that, by downloading and or using this photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Maddie Meyer/Getty Images)
OAKLAND, CA - JUNE 02: Andre Iguodala #9 of the Golden State Warriors goes up to dunk the ball against J.R. Smith #5 of the Cleveland Cavaliers in the first half in Game 1 of the 2016 NBA Finals at ORACLE Arena on June 2, 2016 in Oakland, California. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Ezra Shaw/Getty Images)
OAKLAND, CA - JUNE 19: LeBron James #23 of the Cleveland Cavaliers reacts after defeating the Golden State Warriors 93-89 in Game 7 of the 2016 NBA Finals at ORACLE Arena on June 19, 2016 in Oakland, California. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Ezra Shaw/Getty Images)
OAKLAND, CA - JUNE 19: LeBron James #23 and Kevin Love #0 of the Cleveland Cavaliers celebrate after defeating the Golden State Warriors 93-89 in Game 7 of the 2016 NBA Finals at ORACLE Arena on June 19, 2016 in Oakland, California. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Ezra Shaw/Getty Images)
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