Momentive Performance Materials Inc. which filed for bankruptcy in April of 2014

timer Asked: May 26th, 2015

Question description

Momentive Performance Materials Inc. which filed for bankruptcy in April of 2014 is about to emerge from bankruptcy in October of 2014. The Waterford, New York silicone and quartz manufacturer entered bankruptcy with $4.17 billion in debt and 1,272 employees. Total revenue was $2.36 billion in 2012. The company reported that "Upon emergence, MPM will have eliminated $3 billion of debt, and will have liquidity of approximately $425 million and net debt of approximately $1.2 billion." Creditors will receive 100 percent investment recovery. Cash will be raised with a $600 million rights offering. Total employment remained unchanged.

  1. How could creditors recover all of their money if their old debt was eliminated?
  2. The rights offering was the sole item given to old shareholders. Why would they invest $600 million in a company that had wiped out their original investment?
  3. The bankruptcy case exited the court in 6 months. How could the case have concluded so quickly?

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