Publications

On October 20, the U.S. Second Circuit Court of Appeals (the “Court”) issued a unanimous decision on the highly anticipated Momentive Performance Materials appeal. The case was an appeal of the U.S. district court’s affirmation of the bankruptcy court’s order confirming the Momentive Chapter 11 plan. The Court’s decision largely upheld the plan confirmation as it stood, finding no merit in arguments by senior noteholders that they are entitled to a make-whole premium and confirming that the subordinated notes are junior in priority to the second lien notes. However, the Court found that the challenges were not equitably moot despite substantial consummation of the plan, and, critically, the court held that the wrong standard had been applied by lower courts when evaluating the cramdown rate of interest on the replacement notes issued under the plan. The Court remanded the issue to the bankruptcy court to apply a revised two-step efficient markets approach to establish an appropriate cramdown interest rate.