We previously covered the Meridian Sunrise Village case on the Bankruptcy Blog here.

On August 26, 2014, Judge Drain concluded the confirmation hearing in Momentive Performance Materials and issued several bench rulings on cramdown interest rates, the availability of a make-whole premium, third party releases, and the extent of the subordination of senior subordinated noteholders.

On August 26, 2014, Judge Drain, of the Bankruptcy Court for the Southern District of New York, concluded the confirmation hearing in Momentive Performance Materials and issued several bench rulings on cramdown interest rates, the availability of a make-whole premium, third party releases, and the extent of the subordination of senior subordinated noteholders. This four-part Bankruptcy Blog series will examine Judge Drain’s rulings in detail, with Part I of this series providing you with a primer on cramdown in the secured creditor context.

Lenders typically have extensive requirements for what inventory will be deemed “eligible” and included in a borrower’s borrowing base for purposes of determining how much the lender is required to lend. One of those typical requirements is that the inventory be owned by the borrower and located at a borrower location in the United States of America, where it will be subject to the Uniform Commercial Code and amenable to an Article 9 security interest.

Sadly, sometimes tragedy strikes, as it did for the Montreal Maine & Atlantic Railway Ltd. in July, 2013, when one of its trains carrying crude oil derailed and exploded, resulting in 47 deaths, significant property and environmental damage, and the bankruptcy of the Railway. The Railway had a business interruption insurance policy, a settlement was reached with the insurer and the question of who was entitled to the multi-million-dollar settlement arose in the bankruptcy. In re Montreal Maine & Atlantic Ltd., 2014 Bankr. LEXIS 1628. 59 Bankr. Ct. Dec. 101 (Bankr. D.