Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Momentive Faces Criticisms As It Heads To Bankruptcy Court
Author: Joel R. Glucksman
Date: August 26, 2014
Key Contacts
Back
Apollo Global Management-owned silicone and quartz producer Momentive Performance Materials recently began a week of bankruptcy hearings to determine whether its plan to shed $3 billion of debt will be approved.
Momentive filed for protection under Chapter 11 of the bankruptcy law in April after failing to turn a profit since its acquisition by Apollo in 2006, according to Bloomberg.
The New York-based company filed for bankruptcy with an agreement to transfer control to one class of bondholders, despite strong opposition from other creditors, Reuters reported. The deal hinges on a $1.3 billion loan from JPMorgan Chase & Co. and a rights offering to holders of second-lien bonds worth $600 million. This would allow the second-lien bondholders to receive Momentive’s equity.
While a large number of the company’s other creditors are strongly opposed to the deal as it stands now, most rest on a few lines of the contract, the news source explained. If Bankruptcy Judge Robert Drain sides with creditors in his interpretation of these lines early on, the rest of the four days set aside for bankruptcy hearings may be obviated.
The main objection comes from Momentive’s junior bondholders, led by U.S. Bank NA, according to Reuters. These creditors would recover nothing under the plan. U.S. Bank is owed approximately $382 million, and says that it cannot be put behind other creditors in the payback line. Momentive is citing contract language that puts the bank’s debt behind other creditors, but U.S. Bank maintains that this clause only applies to senior secured lenders. If Drain sides with U.S. Bank, Momentive will have to start work an a new plan of restructuring.
Some creditors have also noted that Apollo Global Management is getting a so-called “sweetheart” deal in this bankruptcy, as it owns Momentive and holds some of its second-lien debt.
“It’s like doing a deal with your wife,” a source told Reuters. “If the other side wins, you still win.”
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Legal Issues Before Bringing on Investors
Bringing on outside investors can provide the capital and strategic support a business needs to grow. However, raising capital also introduces important legal, financial, and operational considerations. Before bringing on investors, businesses should address key legal issues to reduce risk, streamline investor due diligence, and position the company for long-term success. Early preparation signals that […]
Author: Dan Brecher
SECURE 2.0 RMD Planning Strategies
How the Updated Law Shapes Retirement and Estate Planning The SECURE 2.0 Act of 2022 materially reshapes the required minimum distribution (RMD) landscape, extending tax deferral opportunities while accelerating distribution requirements for many beneficiaries. For high-net-worth individuals and families, these changes are not merely technical. They require a reassessment of retirement income strategies, beneficiary planning, […]
Author: Marc J. Comer
Buying Commercial Property in New Jersey: Legal Guide for Small Businesses
Small businesses considering buying commercial property in New Jersey must evaluate a range of legal, financial, and operational factors. While ownership can offer long-term value and control, it also introduces significant risks if not properly structured. This guide outlines key considerations to help New Jersey business owners make informed decisions, minimize legal exposure, and successfully […]
Author: Robert L. Baker, Jr.
The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities
On January 28, 2026, staff of the U.S. Securities and Exchange Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement clarifying how existing federal securities laws apply to tokenized securities. The SEC’s “Statement on Tokenized Securities” does not establish new law, but it does provide greater clarity on the […]
Author: Dan Brecher
Common Legal Mistakes NYC and New Jersey Business Owners Make
Operating a business in the New Jersey and New York City metropolitan region offers incredible opportunities, but it also requires navigating a dense and highly regulated legal environment. From entity formation to regulatory compliance, seemingly minor legal oversights can expose business owners to significant risk. In our work with businesses throughout the region, our attorneys […]
Author: Dan Brecher
What Founders Can Learn From Start-up Suits
High-profile founder litigation is more than just a media spectacle. For startup founders, these cases underscore the legal and structural risks that can arise when rapid growth outpaces formal oversight. While launching a new company can be both an exciting and deeply rewarding endeavor, founders must be mindful that it also comes with significant risks. […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.