In re Dow Corning Corp.

244 B.R. 634 (1991)

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In re Dow Corning Corp.

United States Bankruptcy Court for the Eastern District of Michigan
244 B.R. 634 (1991)

Facts

Dow Corning Corporation (Dow) (debtor) produced silicone gel breast implants. After some studies suggested that the implants could cause autoimmune issues, many implant recipients sued Dow. Dow filed a petition for Chapter 11 bankruptcy and a reorganization plan. The plan established funds for compensation of personal-injury claimants and other creditors. The plan divided Dow’s creditors into 33 classes and subclasses. Some of these classes objected to the plan’s classification system. Class 6.1 comprised foreign breast-implant claimants from nations with common-law tort systems, from European Union member nations, or from nations with per capita gross domestic products greater than 60 percent of the per capita gross domestic product of the United States. This class received settlement offers of 60 percent of domestic claimants’ offers. Class 6.2 comprised all other foreign claimants. This class received offers of 35 percent of domestic claimants’ offers. Section 1122(a) of the Bankruptcy Code (code) stated that claims could be classified together only if they were substantially similar. Section 1123(a)(4) required that members of a claimant class be treated equally. Some foreign claimants argued that their claims should be placed in the same class as domestic claims on the grounds that the claims were substantially similar. Other foreign claimants argued that their claims were worth more than those of other foreign claimants and should be classified separately. Expert witnesses testified that tort recoveries in Europe, Australia, New Zealand, and other jurisdictions tended to be lower than those in the United States.

Rule of Law

Issue

Holding and Reasoning (Spector, C.J.)

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