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July 3, 2019

Milbank Successfully Represents Crossholder Ad Hoc Group in Hexion Restructuring

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Milbank successfully represented an ad hoc group (the “Crossholder Ad Hoc Group”) of certain holders of various tranches of secured and/or unsecured notes of Hexion Inc. (together with certain of its affiliates and subsidiaries, “Hexion”) in Hexion’s chapter 11 cases. Hexion is a leader in the field of thermoset resins, which are used in thousands of applications and sold to diverse markets, operates 47 production sites around the world, and serves more than 3,100 customers in approximately 85 countries. 

Prior to the bankruptcy filing, Hexion’s key economic stakeholders – the Crossholder Ad Hoc Group along with an ad hoc group of holders of first lien notes and an ad hoc group of holders of 1.5 lien notes – vigorously debated a variety of complex intercreditor issues, including the scope and value of the “Principal Property” collateral exclusion contained in Hexion’s debt documents.

Rather than pursue costly and protracted litigation, the three ad hoc groups agreed to a global settlement of these issues and entered into a restructuring support agreement with Hexion and its sponsor pursuant to which the members of the ad hoc groups agreed to support a restructuring that would equitize over $2 billion in funded debt, raise nearly $2 billion in debt and equity financing, consisting of more than $1.6 billion of debt financing and a $300 million equity rights offering, each fully backstopped by certain members of the ad hoc groups, and render all general unsecured claims unimpaired. 

On April 1, 2019, Hexion Inc. and certain of its affiliates filed voluntary petitions for bankruptcy relief in the US Bankruptcy Court for the District of Delaware to implement the transactions contemplated by the restructuring support agreement. The bankruptcy court confirmed Hexion’s plan of reorganization on June 24, 2019, overruling objections from the Office of the United States Trustee. Hexion emerged from bankruptcy on July 1, 2019.

The Milbank team was led by partners Dennis Dunne, Samuel Khalil, and Matthew Brod (Financial Restructuring) and included partners Albert Pisa (Alternative Investments), Rod Miller (Capital Markets), Scott Golenbock (Corporate), and Russell Kestenbaum (Tax), as well as associate Brian Zucco (Financial Restructuring).