Client Alert
In an important bench ruling in the MPM Silicones case, Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York has provided debtors with a potentially coercive tool to use as leverage against their secured creditors. By interpreting § 1129(b)(2)(A)(i)(II) (the “Cramdown Provisions”) using case law thought previously only to apply to chapter 13 consumer bankruptcy cases, chapter 11 debtors may now be permitted to exchange high-yield secured notes for long-term replacement debt bearing below-market rates.
