3rd Circ. Continues Momentive Trend For Secured Creditors

Law360 (August 6, 2019, 2:53 PM EDT) -- In a previous article, we discussed the opinion of the U.S. District Court for the Southern District of New York in the MPM Silicones LLC, or Momentive, case and its potential effects on intercreditor agreements and reorganizations.[1]

The Momentive court held that stock in a reorganized debtor given to junior noteholders was not subject to a turnover provision in a lien subordination agreement because such stock was not the result of a change in the collateral that diluted the collateral’s value and therefore did not constitute “proceeds” of the collateral.[2] That holding, we explained, could affect restructurings by incentivizing senior secured...

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