The United States District Court for the Southern District of New York Upholds Rulings With Respect to Subordination, Cramdown and the Make-Whole Dispute

In a memorandum decision dated May 4, 2015, Judge Vincent L. Briccetti of the United States District Court for the Southern District of New York affirmed the September 2014 decision of Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York, confirming the joint plans of reorganization (the “Plan”) in the Chapter 11 cases of MPM Silicones LLC and its affiliates (“Momentive”). Appeals were taken on three separate parts of Judge Drain’s confirmation decision, each of which ultimately was affirmed by the district court:

(i) the language in the indenture for Momentive’s subordinated unsecured notes (the “Subordinated Notes”) that carved out from the definition of “Senior Indebtedness” any debt that by its terms was junior to any other debt in any respect did not prevent Momentive’s second lien notes (the “Second Lien Notes”), which were subject to subordinated liens relative to Momentive’s first lien notes (the “Senior Lien Notes”), from being treated as Senior Indebtedness relative to the Subordinated Notes...