Momentive Win Shifts Balance Of Power In Ch. 11 Process

Law360, New York (May 6, 2015, 5:36 PM EDT) -- The affirmation of a bankruptcy plan orchestrated to salvage a bad buyout for Momentive Performance Materials Inc. tips the playing field in Chapter 11 away from secured creditors that usually wield the most power and toward private equity sponsors eager to preserve equity stakes.

Monday’s decision upholding Momentive’s $3 billion debt-cutting strategy will be felt across the commercial lending industry, and lawyers expect it to encourage the development of Chapter 11 plans that propose harsh restructuring terms for senior creditors. Top-ranking lenders enjoy the most power to oppose unfavorable bankruptcy exit plans, but U.S. District Judge Vincent Briccetti affirmed that Momentive’s...

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