Twenty-seven plaintiffs sued Dow Corning Corporation (Dow) (defendant), seeking recovery for injuries resulting from allegedly faulty breast implants manufactured by Dow. The parties entered into a settlement agreement, under which Dow agreed to pay the plaintiffs a total of $17,000,000 over several years in a series of installments. Dow also agreed to pay $100 for each day that Dow was late in paying any particular plaintiff. This provision was initially proposed as a penalty provision but was described in the final agreement as liquidated damages. Dow later filed for bankruptcy and stopped making settlement payments. The plaintiffs sold their rights to the settlement payments to Bear Stearns Investment Products, Inc. and related entities (Bear Stearns) (plaintiff). Years later, the bankruptcy court approved a reorganization plan for Dow that included payment to Bear Stearns of the remaining settlement amount of $13,000,000, plus interest of $9,600,000, but did not allow for the $8,750,000 that was requested as liquidated damages. Bear Stearns appealed the denial of its liquidated damages claim to the district court. The district court entered summary judgment in favor of Dow, finding that the damages clause was an unenforceable penalty provision. Bear Stearns appealed.