Third Circuit Departs from Momentive and Enforces Make-Whole Provisions in EFH

On November 17, 2016, the Third Circuit Court of Appeals held in Delaware Trust Co. v. Energy Future Intermediate Holding Co. LLC (In re Energy Future Holdings Corp.) (EFH), 842 F.3d 247 (3d Cir. 2016), that the debtors, Energy Future Intermediate Holding Company LLC and EFIH Finance Inc. (collectively, EFIH), were obligated to pay make-whole premiums despite the acceleration of the underlying debts caused by the debtors’ filing for Chapter 11 bankruptcy.

The Third Circuit’s decision is contrary to recent decisions by the bankruptcy and district courts in the Southern District of New York. In re MPM Silicones, LLC (Momentive), No. 14-22503-RDD, 2014 WL 4436335 (Bankr. S.D.N.Y. Sept. 9, 2014), aff’d, 531 B.R. 321 (S.D.N.Y. 2015).

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Curtis S. Miller, Matthew O. Talmo, “Third Circuit Departs from Momentive and Enforces Make-Whole Provisions in EFH,” ABA Bankruptcy & Insolvency Litigation Committee (March 16, 2017)