Momentive Performance Materials Inc. (with its subsidiaries “Momentive”) is one of the world’s largest producers of silicones and silicone derivatives, and is a global leader in the development and manufacture of products derived from quartz and specialty ceramics. Milbank represented an ad hoc committee of creditors (the “Ad Hoc Committee”), collectively holding over $400 million of the second lien notes issued by Momentive. The company encountered severe liquidity issues in 1Q 2014 as the continued slowdown of global economic growth and increasing over-capacity in its industry negatively impacted the results of both the silicones and quartz businesses.
Milbank negotiated a comprehensive restructuring support agreement on behalf of the Ad Hoc Committee just prior to Momentive’s bankruptcy filing. The deal provided for a plan of reorganization (the “Plan”) that would convert Momentive’s second lien note claims to equity and give second lien noteholders the opportunity to purchase additional equity pursuant to a $600 million rights offering backstopped in substantial part by the Ad Hoc Committee. Following consummation of the Plan, the members of the Ad Hoc Committee will hold a majority of Momentive’s new equity.
The Plan drew objections from creditors throughout Momentive's capital structure, who were represented by the indenture trustees for the first and 1.5 lien notes issued by Momentive, as well as the indenture trustee for Momentive's senior subordinated notes. These objections implicated a number of topics, including with respect to the cramdown of secured creditors in chapter 11, the scope of subordination provisions provided in a subordinated indenture, and the enforceability of make-whole provisions in bankruptcy. The parties actively litigated each of these issues, among others, over the course of a week-long confirmation hearing, in which Milbank played a leading role. On August 26, 2014, in a wide-ranging bench ruling, the Bankruptcy Court overruled each of these objections, concluding that the Plan would be confirmed with only minor modifications. An order confirming the Plan was entered by the Bankruptcy Court on September 11, 2014, and the Plan was consummated on October 24, 2014.
The Milbank team representing the Ad Hoc Committee was led by Dennis F. Dunne and Samuel A. Khalil (Financial Restructuring Partners, NY); and included Michael Hirschfeld (Litigation Partner, NY); Andrew LeBlanc (Financial Restructuring and Litigation Partner, NY and DC); Abhilash Raval (Financial Restructuring Partner, NY); Paul Denaro and Rod Miller (Securities Partners, NY); Alexander Kaye (Corporate Partner, NY); Russell Kestenbaum (Tax Partner, NY); Scott Golenbock (Corporate Special Counsel, NY); Aaron Renenger (Litigation Special Counsel, DC); Lena Mandel (Financial Restructuring NY); Dennis O’Donnell (Financial Restructuring Of Counsel NY); Eric Stodola (Financial Restructuring Associate, NY); Sam Badawi (Securities Associate, NY); Dawn Harrop (Litigation Associate, NY).
