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DETROIT, Aug. 21, 2019 (GLOBE NEWSWIRE) -- After 22 years of litigation, Dow Silicones Corporation – formerly Dow Corning Corporation – today agreed, subject to court approval, to pay $172 million in default interest on loans made to Dow before it filed its bankruptcy case. Pepper Hamilton LLP partner Robert S. Hertzberg led the team representing the claimants asserting the right to default interest under their respective loan agreements during Dow’s chapter 11 bankruptcy proceedings.
“After 22 long years, I’m happy we’ve reached a consensual resolution in which the claimants will be paid what they’re owed,” said Hertzberg. “When Dow Corning entered into these loans, it was responsible for fulfilling its requirements, regardless of the company’s bankruptcy status. I’m pleased with the outcome today.”
In 1995, Dow Corning Corporation filed for chapter 11 bankruptcy protection in the Eastern District of Michigan, after being named in thousands of lawsuits by women who claimed they became sick from the company’s silicone gel breast implants. In 2004, Dow’s reorganization plan went into effect, after several years of appeals and the lengthiest post-confirmation period on record. The claimants argued that Dow owed them default-rate interest on the loans during this nine-year time period from which the company filed for bankruptcy protection to when the plan actually went into effect.
When the plan went effective, the claimants were paid the principal and interest at a lower rate set by the bankruptcy plan. The dispute arose from the claimants’ enforcing the terms of the loan agreements. Over the course of the 22 years, there were numerous appeals by various parties to the Sixth Circuit Court of Appeals. The case was settled just before it was set to go to trial.
In April 2019, the claimants and Dow went to mediation, and the case was successfully mediated by the Honorable Phillip J. Shefferly, the Chief Bankruptcy Judge for the United States Bankruptcy Court for the Eastern District of Michigan. The settlement agreed to today is subject to court approval before becoming final.
“This has been one of the most unique cases I’ve seen, especially since it’s spanned more than half of my 40-year career in bankruptcy,” added Hertzberg. “It’s a great day for all who have been involved throughout this case’s lifecycle, to finally get these claimants what they are rightfully owed.”
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