- Case Type:
- Case Status:
- Affirmed in part and Reversed in part
- 15-1771, 15-1682, 15-1824 (2nd Circuit, Oct 20,2017) Not Published
- The Second Circuit affirmed the lower court's rulings concerning priority of the Second-Lien Holders over the Subordinate Notes holders; affirmed lower court's ruling finding Senior Lien Holders were not entitled to "make whole premium;" reviewed Till v. SCS Credit Corp. and applied 6th Circuit's approach to determine applicable interest rates (market v. formula) in a Chapter 11 case and remanded issue back to Bankruptcy Court for determination of whether market rate existed; and denied debtors' motion that the appeals were moot.
- Procedural context:
- Three groups of creditors appeal a judgment of the District Court affirming the confirmation of the debtors’ Chapter 11 reorganization plan. Over the creditors’ objections, the Bankruptcy Court confirmed the debtors’ Chapter 11 plan finding the plan was fair and equitable under the Chapter 11 “cramdown” provision. The District Court affirmed the Bankruptcy Court’s confirmation order and four issues were presented on appeal to the Second Circuit: (i) the Subordinate Notes holders (receiving nothing under the Plan) challenge the conclusion that their claims are subordinate to the Second Lien Notes holder’s claims; (ii) the Senior Lien Notes holders (who elected to receive replacement notes under the Plan) challenge the application of below market interest rate to their replacement notes; (iii) Senior Lien Notes Holders challenge the ruling that they are not entitled to a make-whole premium; and (iv) the debtors argue the appeals should all be dismissed as equitably moot. The Second Circuit affirmed in part and remanded in part the District Court’s order affirming confirmation of the debtors’ Chapter 11 plan.
- The debtors (MP Silicones, LLC) was a leading producer of silicone and faced serious financial problems after it took on significant debt obligations in the mid-2000s. Ultimately, MPM was overleveraged and filed a petition under Chapter 11 in April 2014. The rights of three groups of creditors are at issue in this decision: (1) Subordinated Note holders, issued in 2006 pursuant to a 2006 indenture agreement, who were not entitled to recovery under the Plan; (ii) Second-Lien Note holders, issued in 2010, entitled to receive an estimated 12.8%-28.1% recovery in the form of equity in the reorganized debtors; and (iii) Senior Lien Note holders, issued in 2012, entitled to receive 100% cash recovery of the principal balance and accrued interest on their notes, but who ultimately rejected the plan so they could be issued replacement notes.
- Cabranes, Pooler and Parker
PRICE v. SPOKANE ROCK I, LLC
Summarizing by Bradley Pearce
WHATLEY, JR v CANADIAN PACIFIC RAILWAY, LTD
Summarizing by Lars Fuller
2771 in the system
8 Being Processed