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In the United States Court of Appeals for the Second Circuit Case 15-1682, Document 64, 09/04/2015, 1592648, Page1 of 72 No. 15-1682 In the United States Court of Appeals for the Second Circuit IN RE: MPM SILICONES, L.L.C., Debtor, MOMENTIVE PERFORMANCE MATERIALS INC.; APOLLO GLOBAL MANAGEMENT, LLC; AD HOC COMMITTEE OF SECOND LIENHOLDERS, Plaintiffs - Appellees, v. BOKF, NA, AS FIRST LIEN TRUSTEE; WILMINGTON TRUST, N.A., AS 1.5 LIEN TRUSTEE, Defendants - Appellants. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK BRIEF FOR DEFENDANT-APPELLANT BOKF, NA DANIELLE SPINELLI PHILIP D. ANKER JOEL MILLAR ALAN E. SCHOENFELD WILMER CUTLER PICKERING WILMER CUTLER PICKERING HALE AND DORR LLP HALE AND DORR LLP 1875 PENNSYLVANIA AVE N.W. 7 WORLD TRADE CENTER WASHINGTON, D.C. 20006 250 GREENWICH STREET (202) 663-6000 NEW YORK, NY 10007 (212) 230-8000 MICHAEL J. SAGE BRIAN E. GREER G. ERIC BRUNSTAD, JR. DECHERT LLP DECHERT LLP 1095 AVENUE OF THE AMERICAS 90 STATE HOUSE SQUARE NEW YORK, NY 10036-6797 HARTFORD, CT 06103-3702 (212) 698-3500 (860) 524-3999 Counsel for BOKF, NA Case 15-1682, Document 64, 09/04/2015, 1592648, Page2 of 72 CORPORATE DISCLOSURE STATEMENT Pursuant to Federal Rule of Appellate Procedure 26.1, BOKF, NA, in its capacity as indenture trustee, makes the following disclosures: BOKF, NA is a wholly owned subsidiary of BOK Financial Corporation. BOK Financial Corporation is a publicly held corporation whose shares are traded on the NASDAQ stock exchange. No publicly held corporation owns 10% or more of BOK Financial Corporation’s stock. - i - Case 15-1682, Document 64, 09/04/2015, 1592648, Page3 of 72 TABLE OF CONTENTS Page CORPORATE DISCLOSURE STATEMENT .......................................................... i TABLE OF AUTHORITIES .................................................................................... iv PRELIMINARY STATEMENT ............................................................................... 1 JURISDICTIONAL STATEMENT .......................................................................... 5 STATEMENT OF ISSUES PRESENTED ................................................................ 6 STATEMENT OF FACTS AND OF THE CASE .................................................... 6 I. THE DEBTORS ......................................................................................... 6 II. THE FIRST-LIEN NOTES AND THE INDENTURE ....................................... 7 III. THE BANKRUPTCY FILING AND THE PLAN ............................................. 9 IV. THE PLAN CONFIRMATION PROCEEDINGS AND THE BANKRUPTCY COURT’S DECISION ........................................................ 11 V. THE APPEAL AND THE DISTRICT COURT’S DECISION .......................... 14 SUMMARY OF ARGUMENT ............................................................................... 15 STANDARD OF REVIEW ..................................................................................... 16 ARGUMENT ........................................................................................................... 17 I. THE PLAN DOES NOT SATISFY SECTION 1129(B)’S REQUIREMENT THAT THE NOTEHOLDERS RECEIVE THE FULL “VALUE” OF THEIR SECURED CLAIMS. ................................................ 17 A. Section 1129(b) Requires That A Nonconsenting Fully Secured Creditor Receive Payment In Full. .............................. 19 B. The Plan Did Not Pay The Noteholders In Full. ...................... 22 C. The Bankruptcy Court Erred In Relying On The Chapter 13 Decisions In Till And Valenti. ................................ 26 1. Till And Valenti Applied A Formula Approach In Chapter 13 Because There Was No Competitive Market Rate For Loans To Chapter 13 Debtors. ............ 26 2. The Text And Purpose Of The Chapter 13 Provisions Construed In Till And Valenti Differ Materially From Chapter 11’s Cramdown Provisions. ...................................................................... 33 - ii - Case 15-1682, Document 64, 09/04/2015, 1592648, Page4 of 72 II. THE NOTEHOLDERS ARE ENTITLED TO THE MAKE-WHOLE. ................ 36 A. Momentive Owes The Make-Whole Because It Redeemed The Notes Before October 15, 2015. ...................... 37 B. The Indenture Required Momentive To Pay The Make-Whole Notwithstanding The Bankruptcy. ...................... 39 C. The Bankruptcy Court Erred In Adopting A Presumption Against Enforcing Make-Whole Provisions In Bankruptcy. ......................................................... 47 D. Even Under The Bankruptcy Court’s Reading, It Erred In Disallowing The Noteholders’ Claim, Given The Noteholders’ Contractual Right to Rescind Acceleration. ............................................................................. 51 III. THE APPEAL IS NOT EQUITABLY MOOT. .............................................. 56 CONCLUSION ........................................................................................................ 59 CERTIFICATE OF COMPLIANCE - iii - Case 15-1682, Document 64, 09/04/2015, 1592648, Page5 of 72 TABLE OF AUTHORITIES Page(s) CASES Bank of American National Trust & Savings Association v. 203 N. LaSalle Street Partnership, 526 U.S. 434 (1999) .................................... 23, 24 Case v. Los Angeles Lumber Co., 308 U.S. 106 (1939)................................................................................. 21, 26 Chesapeake Energy Corp. v. Bank of New York Mellon Trust Co., 773 F.3d 110 (2d Cir. 2014) ........................................................ 37, 39, 40, 47 Consolidated Rock Products Co. v. Du Bois, 312 U.S. 510 (1941)........................................................................... 21, 26, 34 ERC 16W Limited Partnership v. Xanadu Mezz Holdings LLC, 943 N.Y.S.2d 493 (App. Div. 2012) .............................................................. 37 Federal National Mortgage Association v. Miller, 473 N.Y.S.2d 743 (Sup. Ct. 1984) ................................................................ 40 Getty Petroleum Corp. v. Bartco Petroleum Corp., 858 F.2d 103 (2d Cir. 1988) .......................................................................... 55 Heine v. Signal Cos., 1977 U.S. Dist. LEXIS 17071 (S.D.N.Y. Mar. 4, 1977) ............................... 39 In re 20 Bayard Views, LLC, 445 B.R. 83 (E.D.N.Y. 2011) ........................................................................ 29 In re American HomePatient, Inc., 420 F.3d 559 (6th Cir. 2005) ................................................................... 29, 59 In re AMR Corp., 730 F.3d 88 (2d Cir. 2013) ....................................................17, 37, 49, 50, 55 In re Calpine Corp., 365 B.R. 392 (Bankr. S.D.N.Y. 2007) .................................................... 45, 47 In re Calpine Corp., 2010 WL 3835200 (S.D.N.Y. Sept. 15, 2010) .............................................. 47 - iv - Case 15-1682, Document 64, 09/04/2015, 1592648, Page6 of 72 In re Charter Communications, Inc., 691 F.3d 476 (2d Cir. 2012) .................................................................... 43, 56 In re Chateaugay Corp., 944 F.2d 997 (2d Cir. 1991) .......................................................................... 52 In re Chateaugay Corp., 10 F.3d 944 (2d Cir. 1993) ...................................................................... 57, 58 In re Chemtura Corp., 439 B.R. 561 (Bankr. S.D.N.Y. 2010) ..................................38, 44, 45, 46, 47 In re DBSD North America, Inc., 419 B.R. 179 (Bankr. S.D.N.Y. 2009) .............................................................................................................. 29 In re Energy Future Holdings Corp., 527 B.R. 178 (Bankr. D. Del. 2015) .............................................................. 45 In re Granite Broadcasting Corp., 369 B.R. 120 (Bankr. S.D.N.Y. 2007) .................................................... 47, 48 In re Imperial Coronado Partners, Ltd., 96 B.R. 997 (B.A.P. 9th Cir. 1989) ............................................................... 43 In re Integrated Telecom Express, Inc., 384 F.3d 108 (3d Cir. 2004) .......................................................................... 54 In re LaGuardia Associates, L.P., 2012 Bankr. LEXIS. 5612 (Bankr. E.D. Pa. Dec. 5, 2012) ........................... 48 In re LHD Realty Corp., 726 F.2d 327 (7th Cir. 1984) ............................................................. 47, 48, 50 In re Metromedia Fiber Network, Inc., 416 F.3d 136 (2d Cir. 2005) .................................................................... 57, 58 In re Murel Holding Corp., 75 F.2d 941 (2d Cir. 1935) ...................................................................... 20, 34 In re Oakwood Homes Corp., 449 F.3d 588 (3d Cir. 2006) .......................................................................... 45 - v - Case 15-1682, Document 64, 09/04/2015, 1592648, Page7 of 72 In re Philadelphia Newspapers, LLC, 690 F.3d 161 (3d Cir. 2012) .......................................................................... 58 In re Premier Entertainment Biloxi LLC, 445 B.R. 582 (Bankr. S.D. Miss. 2010) .................................................passim In re Quebecor World (USA) Inc., 719 F.3d 94 (2d Cir. 2013) ................................................................ 16, 39, 40 In re Quigley Co., 676 F.3d 45 (2d Cir. 2012) ............................................................................ 16 In re Rodriguez, 629 F.3d 136 (3d Cir. 2010) .......................................................................... 53 In re Sagamore Partners, Ltd., 2015 WL 5091909 (11th Cir. Aug. 31, 2015)
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