News & Analysis as of

Make-Whole Premium

Chapter 11 Plan Not Providing for Payment of Make-Whole Premium Impaired Noteholders

by Jones Day on

In In re Ultra Petroleum Corp., 2017 BL 335015 (Bankr. S.D. Tex. Sept. 21, 2017), the U.S. Bankruptcy Court for the Southern District of Texas ruled that certain private-placement noteholders were entitled to receive a...more

Second Circuit Issues Key Cramdown Interest Rate Ruling

by Jones Day on

In Momentive Performance Materials Inc. v. BOKF, NA (In re MPM Silicones, L.L.C.), 2017 BL 376794 (2d Cir. Oct. 27, 2017) ("Momentive"), the U.S. Court of Appeals for the Second Circuit, in a long-anticipated decision,...more

(Make) Wholly Moly: U.S. Court of Appeals for the Second Circuit Upholds Ruling Denying Noteholders’ Entitlement to a Make-Whole...

by Shearman & Sterling LLP on

On October 20, 2017, the United States Court of Appeals for the Second Circuit issued a decision which, among other things, affirmed the lower courts’ holding that certain noteholders were not entitled to payment of a...more

A Momentive Decision: Second Circuit Splits with Third Circuit on Make Whole Premiums; Adopts Sixth Circuit’s Two-Step Approach in...

Last week the Second Circuit issued its long-awaited opinion on the appeals of plan confirmation taken by the first lien, 1.5 lien and subordinated noteholders in In re MPM Silicones, LLC (“Momentive”). With one exception,...more

Second Circuit Rules on Chapter 11 Cram-Down, Make-Whole, and Subordination Issues

by Jones Day on

The Situation: In In re MPM Silicones, L.L.C., secured noteholders argued that replacement notes distributed to them under a cram-down chapter 11 plan should bear market-rate interest rather than the lower formula rate...more

Second Circuit Rejects Categorical Dismissal Of Market Rates When Determining Cram-Down Interest Rates In Chapter 11

On October 20, 2017, the Second Circuit issued its long awaited ruling on several appeals from a U.S. District Court (Bricetti, J.) determination affirming the United States Bankruptcy Court (Drain, J.) in the MPM Silicones,...more

Recent Cases Restrict Issuers' Ability to Avoid Paying Premiums

by White & Case LLP on

Indentures governing high yield and investment grade notes typically provide for a make-whole or other premium to be paid if the issuer redeems the underlying notes prior to maturity. The premiums are intended to compensate...more

Federal Appellate Court Rules That Post-Acceleration Payment in Bankruptcy Constitutes Optional Redemption

The linked Mintz Levin client advisory discusses a recent Third Circuit Court of Appeals ruling that held a “make-whole” optional redemption premium to be due upon a refinancing of corporate debt following its automatic...more

Third Circuit Enforces Make-Whole Premium for Notes Accelerated by Bankruptcy Filing

by McGuireWoods LLP on

Some term loans allow borrowers to redeem debt. But to protect a lender’s expected yield, such loans often impose a “make-whole premium” on redemption. That is, they require compensation to the lender for the borrower’s...more

Third Circuit Rules That Make-Whole Claims of Energy Future’s Bondholders Are Enforceable in Chapter 11 Proceeding

by K&L Gates LLP on

In a November 17, 2016 ruling likely to impact ongoing debt restructurings, pending bankruptcy proceedings and negotiations of new debt issuances, the Third Circuit recently overturned refusals by both the Delaware bankruptcy...more

Not Entitled to Makewholes? Not So Fast...

by Morrison & Foerster LLP on

Throwing yet another wrench into the long-running and hard fought bankruptcy proceedings of Energy Future Holdings Corp., et al., the Third Circuit recently reversed the decisions of the Delaware bankruptcy and district...more

Make-Whole Momentum Halted: Third Circuit Rejects Momentive Rationale and Requires Debtor to Pay Make-Whole Premium

In a recent decision (“Energy Future Holdings”) poised to have wide-reaching implications, the Third Circuit Court of Appeals reversed the decisions of the Bankruptcy and the District Courts to hold that a debtor cannot use a...more

Third Circuit Court of Appeals: Energy Future Required to Pay Make-Whole Payments

by Cole Schotz on

In a decision released on November 17, 2016, the Third Circuit Court of Appeals reversed the holding of the Delaware Bankruptcy Court, affirmed by the District Court, that EFIH is not required to pay make-whole payments. In...more

Third Circuit Upholds The Enforceability Of Make-Whole Premiums In Post-Bankruptcy Context

In a recent November 17, 2016 opinion, Delaware Trust Co. v. Energy Future Intermediate Holding Company LLC, Case No. 16-1351, the Third Circuit Court of Appeals reversed two lower court opinions by holding that make-whole...more

Bankruptcy & Financial Restructuring Advisory: Delaware District Court Affirms Bankruptcy Court’s Ruling Allowing Debtor to...

by Alston & Bird on

The U.S. District Court for the District of Delaware recently affirmed the bankruptcy court’s ruling in the Energy Future Intermediate Holding (EFIH) case finding that the debtor was not required to pay a $431 million...more

CR&B Alert: Commercial Restructuring & Bankrtupcy News - October 2015, No. 3

by Reed Smith on

Welcome to the October 2015 issue of the CR&B Alert, the newsletter produced by Reed Smith's Commercial Restructuring & Bankruptcy Group. Readers who wish to print and read the newsletter in its entirety may do so by...more

Delaware Bankruptcy Court Allows Debtor to Sidestep “Make-Whole” Payment

by Alston & Bird on

Bankruptcy Judge Christopher S. Sontchi recently ruled in the Energy Future Holdings case that the debtor will not be required to pay the $431 million “make whole” demanded by bondholders upon the debtor’s early payment of...more

Energy Future Holdings – More Bad News for Bondholders on Make-Whole Premiums

by Kelley Drye & Warren LLP on

Make-whole premiums are often used in connection with the issuance of debt in order to protect noteholders with long term investment horizons from being repaid early. At the time of the bankruptcy filing of EFH in April 2014,...more

Bankruptcy & Restructuring Litigation Update - May 2015

New Bankruptcy Challenges for Secured Creditors. The Bankruptcy Code provides secured creditors with significant advantages over their unsecured counterparts. During the past year, however, courts have chipped away at secured...more

Commercial Restructuring & Bankruptcy Alert - February 2015

by Reed Smith on

In This Issue: - Minority Holders Gain Leverage Through Recent Interpretation of Trust Indenture Act - New Jersey Joins Number of States Creating Specialty Business Courts - Credit Bid Rights Bolstered in...more

"Recent Cases Highlight Potential Pitfalls for Distressed Investors"

Despite lower-than-average Chapter 11 activity in 2014, the legal landscape for distressed investors has continued to evolve, with significant legal developments in credit bidding, make-whole premiums and intercreditor...more

Court Rules on Applicability of Make-Whole Premiums Upon Debt Acceleration

In the context of make-whole premiums, court decisions suggest that the applicability of the premium upon a refinancing in bankruptcy will be governed by the wording of the debt documents, and that if an automatic...more

No Market Interest Rate and No Make Whole: Momentive Performance Court Rejects Lender Arguments Against Confirmation

On August 26, 2014, Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York ruled that (i) the debtors could satisfy the cramdown requirements of section 1129(b) of the Bankruptcy...more

Another Court Rules That Availability of Make-Whole Premiums in Bankruptcy Depends on Governing Documents

by Mintz Levin on

In a recent bench decision in In re MPM Silicones, LLC et al., Case No. 14-22503-RDD (Bankr. S.D.N.Y. August 26, 2014), the Bankruptcy Court considered bondholders’ right to recover make-whole premiums (premiums paid for...more

Momentive Senior Noteholders Lose Fight for Make-Whole Premium

by Cooley LLP on

In connection with a contentious restructuring, Judge Drain of the Bankruptcy Court for the Southern District of New York, ruled recently that certain lenders to Momentive Performance Materials Inc. (Case No. 14-22503) had no...more

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