Second Circuit Allows Efficient Market Interest Rates For Cramdown Loans

Print This Post Print This Post

The United States Second Circuit has issued its ruling in the Momentive Performance Materials cases resolving three separate appeals by different groups of creditors of Judge Bricetti’s judgment in the United States District Court of the Southern District of New York, which affirmed Judge Drain’s confirmation of Momentive’s plan of reorganization. Significantly, the Second Circuit ruled that the Bankruptcy Court had erred in the process it used to calculate the “cramdown” interest rate applicable to replacement notes received by senior-lien noteholders under the plan.  The Second Circuit remanded the cases to the Bankruptcy Court to assess whether an efficient market rate can be ascertained, and, if so, to apply that typically higher rate to the replacement notes. This Bankruptcy Blog piece will cover this aspect of the judgment, while upcoming blog posts will cover the Second Circuit’s rulings affirming the Bankruptcy Court and District Court in finding that the second-lien notes stand in priority to the subordinated notes, and that the senior-lien noteholders are not entitled to a make-whole premium.  Our previous posts on these topics can be found here.

Continue reading >>

The Cloak of Good Faith: Protecting Bankruptcy Sales from Appellate Review

Prashant Rai recently published an article on appellate review of section 363 sales in the April 2017 edition of the Norton Bankruptcy Law Adviser.  To access it, please click the link below: https://www.weil.com/~/media/files/pdfs/2017/nbla_april_2017.pdf Posted with permission from Norton Bankruptcy Law Adviser, April 2017 issue.  Copyright (c) 2017 Thomson Reuters/West.  For […]

No Contradiction in Contribution: Tenth Circuit Finds that Bankruptcy Court Approval of Settlement of CERCLA Environmental Claims Does Not Estop Subsequent CERCLA Contribution Claim

Overview In Asarco, LLC v. Noranda Mining, Inc., the Tenth Circuit Court of Appeals held that representations made to the bankruptcy court that the Debtor’s settlement of environmental claims reflected only the Debtor’s share of the cleanup costs did not judicially estop the Debtor from brining a contribution claim against another […]

Fees, Fees, Fees: SDNY Bankruptcy Court Questions the Ongoing Validity of the “Blackstone Protocol” for Investment Banker Fees in Chapter 11 Cases

Background: Professionals’ Fees in Chapter 11 cases Chapter 11 reorganizations are a complex affair. They often require various professionals – attorneys, accountants, investment bankers, appraisers and other professionals – to represent and assist the trustee or debtor in possession in carrying out its duties under the Bankruptcy Code. Section 327 […]