27 mars, 2007 16:04
WASHINGTON (AP) – The Supreme Court refused Monday to consider a case stemming from a long-standing bankruptcy dispute between Dow Corning Corp. and a group of its creditors, which includes investment bank Merrill Lynch & Co. Inc. and Bank of America Corp.
At issue in the dispute is the interest rate that Dow Corning must pay on the debts it owes the creditors. The difference between the rate that Dow Corning is willing to pay and the rate its creditors are demanding amounts to "tens of millions of dollars," according to Dow Corning’s petition to the court
"Clearly we’re, of course, disappointed that the Supreme Court decided not to consider our petition," said company spokesman Jarrod Erpelding. "But we’re still confident that we can ultimately resolve this matter in a fair and equitable way."
The case also involves a larger issue, the company said: specifically, the finality of bankruptcy settlements. Dow Corning argues that a bankruptcy court confirmed a plan settling the company’s bankruptcy in 1999, and under bankruptcy law that plan should be shielded from further legal challenge.
Lawyers for the creditors’ group, which also includes JP Morgan Chase & Co. and Bear Stearns Cos. Inc., argue that they are not seeking to overturn the bankruptcy court’s ruling but to properly enforce its terms.
The 6th Circuit Court of Appeals ruled in favor of the creditors’ group in July 2006, finding that the bankruptcy court erred in approving a settlement that was not consistent with bankruptcy law. That meant the creditors could be entitled to a higher interest rate than a U.S. district judge gave them on debt Dow Corning owed them when it filed for Chapter 11 bankruptcy protection. Dow Corning has paid the creditors 6.28 percent interest on the debt. But the appeals court ruled the lower court should re-evaluate the appropriate amount of interest paid to these creditors and whether Dow Corning should be required to pay the creditors’ attorney fees and court costs. Dow Corning appealed to the Supreme Court.
Erpelding said the company believes the case will go to the U.S. District Court.
Dow Corning was a leading manufacturer of silicone breast implants until the Food and Drug Administration banned them in 1992. The company sought Chapter 11 bankruptcy protection in May 1995 after being hit with 19,000 lawsuits.
The company emerged from bankruptcy in 2004. The FDA, meanwhile, ended its ban on silicone implants in November 2006.
The case is Dow Corning Corp. vs. Committee of Unsecured Creditors, 06-705. Justice Stephen Breyer did not participate in the decision, the court said, without giving any reasons.
