## Facts

- Dow Corning Corporation manufactured silicone-gel breast implants.
- After studies suggested implants might be linked to autoimmune problems, many recipients sued Dow Corning for personal injuries.
- Dow Corning filed a Chapter 11 petition and proposed a reorganization plan that created compensation funds for personal-injury claimants and provided for payment of other creditors.
- The plan divided creditors into 33 classes and subclasses, including separate classes for domestic and foreign breast-implant personal-injury claims.
- The plan’s foreign-claimant structure included:
  - Class 6.1: foreign breast-implant claimants from countries with common-law tort systems, from European Union member nations, or from nations with per-capita gross domestic product greater than 60% of the United States’ per-capita gross domestic product; these claimants were offered 60% of the settlement amounts offered to similarly situated domestic claimants.
  - Class 6.2: all other foreign breast-implant claimants; these claimants were offered 35% of the settlement amounts offered to similarly situated domestic claimants.
- Several creditor groups objected to the classification scheme:
  - Some foreign claimants argued their claims were substantially similar to domestic implant claims and therefore should have been placed in the same class as domestic claimants.
  - Other foreign claimants argued their claims were worth more than those of other foreign claimants and therefore should have been placed in a separate foreign class with better treatment.
- Evidence at the confirmation proceedings included testimony that tort recoveries in various foreign jurisdictions (including parts of Europe, Australia, and New Zealand) tended to be lower than recoveries in the United States.

## Issues

1. Whether the plan’s decision to classify foreign breast-implant personal-injury claims separately from domestic breast-implant claims (and to divide foreign claims into Classes 6.1 and 6.2) violated 11 U.S.C. § 1122(a)’s requirement that only substantially similar claims be placed in the same class.
2. Whether offering foreign claimants lower settlement values than domestic claimants, and offering different percentages to Classes 6.1 and 6.2, violated 11 U.S.C. § 1123(a)(4)’s requirement that each claim in a class receive the same treatment.

## Decision

- The court overruled objections to the plan’s classification of domestic versus foreign implant claims and the plan’s subdivision of foreign implant claims into Classes 6.1 and 6.2.
- The court held the challenged classifications satisfied § 1122(a) because differences in expected tort recoveries and related legal and economic conditions supported treating the groups as not sufficiently alike for a single class.
- The court held § 1123(a)(4) was satisfied because the plan provided the same treatment to all claimants within each class; the statute did not require identical treatment across distinct classes.
- As a result, the court found the plan’s classification and treatment provisions complied with the applicable Bankruptcy Code requirements for confirmation as to these objections.

## Legal Principles

- Under 11 U.S.C. § 1122(a), claims may be grouped together only if they are substantially similar, but substantially similar claims are not required to be placed in a single class when meaningful legal or economic differences justify separate classes.
- Differences in likely recovery value based on jurisdictional tort law and litigation outcomes can support separate classification of personal-injury claims arising from the same product.
- Under 11 U.S.C. § 1123(a)(4), “same treatment” is measured within a class; a plan may treat different classes differently so long as all members of a given class receive the same plan treatment (absent consent to less favorable treatment).
- A plan does not violate § 1123(a)(4) merely because it offers foreign claimants a lower percentage recovery than domestic claimants, if foreign claimants are placed in a separate class supported by a valid basis and the plan applies the class terms uniformly.

## Conclusion

In re Dow Corning Corp. upheld a Chapter 11 plan that separated domestic and foreign breast-implant tort claims and split foreign claimants into two subclasses receiving 60% and 35% of domestic settlement amounts, concluding the distinctions were supported by differences in expected recoveries and that the Bankruptcy Code’s equal-treatment rule requires uniform treatment within each class, not across different classes.


In re Dow Corning Corp., 244 B.R. 634 (1991)