Judge delays ruling on Momentive bankruptcy exit plan
Aug 25 (Reuters) - A judge on Monday delayed a ruling on whether to confirm a plan by Momentive Performance Materials, a quartz and silicone maker owned by Apollo Global Management, to cut $3 billion in debt and exit bankruptcy.
Judge Robert Drain, who had been expected to read his ruling from the bench on Monday, told parties in his White Plains, New York, courtroom that he would hold off until Tuesday as the company tries to resolve certain objections to its plan.
It was the second time Drain has postponed the ruling, which was initially expected last week.
Waterford, New York-based Momentive filed for Chapter 11 bankruptcy in April with an agreement to transfer control to a class of bondholders who would participate in a $600 million rights offering.
The key objection comes from more junior bondholders, led by U.S. Bank NA as trustee, who would recover nothing under the plan. Owed some $382 million, the group cannot be treated worse than the bondholders participating in the rights offering, U.S. Bank says.
Momentive has cited contract language pushing the U.S. Bank group's debt behind other creditors', but the bank claims the clause applies only to senior secured lenders, and that no other creditor group can stand ahead of it in the payback line.
Parties have acknowledged that a win for U.S. Bank on the issue would upend the restructuring and send Momentive back to the drawing board.
Drain's decision to delay his ruling was related to a separate objection from a group of secured lenders owed about $1 billion, who claimed they were entitled to extra premiums in exchange for early redemption of their bonds.
The lenders on Monday signaled a willingness to withdraw their objections, sparking Drain to give the parties another day to try to work out a resolution. He is now expected to rule on Tuesday afternoon. (Reporting by Nick Brown; Editing by Leslie Adler)