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District Court Affirms Cramdown Interest Rate Calculation

By Robert W. Dremluk
August 02, 2015

On May 5, 2015, United States District Judge Vincent L. Bricetti affirmed the confirmation order issued by United States Bankruptcy Judge Robert D. Drain in the MPM Silicones LLC (Momentive' Chapter 11 cases. We discussed the facts and analyzed Judge Drain's ruling with respect to the applicable cramdown interest rate to be applied to secured claims under section 1129(b)(2)(A)(i) of the Bankruptcy Code in a January 2015 article in this newsletter (32 The Bankruptcy Strategist 3 (January 2015)), http://bit.ly/1Od6TWC. On appeal, the senior lien appellants argued that the plan of reorganization confirmed by Judge Drain violated section 1129(b) by using a “formula approach” to calculate the cramdown interest rate, and, in the alternative, by calculating the cramdown interest rate under the formula approach incorrectly.

The Bankruptcy Court's Analysis

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