## Facts

- Dow Corning Corporation manufactured silicone-gel breast implants and supplied silicone materials to other implant makers.
- After studies and regulatory action raised concerns about autoimmune-related injuries, large numbers of recipients sued Dow Corning and also sued its two shareholder parents, The Dow Chemical Company and Corning, Incorporated; insurers were also implicated through coverage disputes.
- Dow Corning filed for Chapter 11 protection amid mass-tort litigation and settlement efforts.
- The proposed reorganization plan created a claims-resolution facility allowing personal-injury claimants to elect settlement or pursue litigation within the plan structure.
- The plan classified claims into numerous classes, including two foreign claimant classes offering reduced payment percentages compared to domestic claims based on country groupings tied to legal and economic conditions.
- The plan also included releases and injunctions barring certain claims against non-debtors (shareholders and insurers) outside the plan, channeling those demands into the reorganization process.
- The bankruptcy court confirmed the plan, and the district court affirmed; objecting claimants appealed.

## Issues

1. Whether a bankruptcy court may approve a Chapter 11 plan that enjoins claims by non-consenting creditors against non-debtor third parties (e.g., shareholders and insurers).
2. Whether separating foreign tort claimants into distinct classes with different payment percentages satisfied 11 U.S.C. § 1122(a)’s “substantially similar” requirement.
3. Whether the plan provided the “same treatment” for claims within a class as required by 11 U.S.C. § 1123(a)(4), despite variations in individual claim value and claimant choices.

## Decision

- The court held that bankruptcy courts may, in limited circumstances, enjoin non-consenting creditors’ claims against non-debtors as part of a Chapter 11 plan.
- The court affirmed the legal availability of non-debtor injunctions but remanded because the bankruptcy court’s findings did not adequately show that the injunctions were warranted on this record.
- The court affirmed confirmation-related rulings upholding the foreign-claimant classifications under § 1122(a).
- The court affirmed that the plan’s options and procedures provided equal treatment within each class under § 1123(a)(4).
- Disposition: affirmed in part and remanded for further findings on the non-debtor injunctions.

## Legal Principles

- A non-debtor release or injunction is not categorically barred in Chapter 11, but it is permissible only in unusual cases and requires careful, specific factual findings.
- A bankruptcy court evaluating third-party injunctions should consider whether the relief is essential to reorganization, fair to affected creditors, and supported by plan features such as meaningful funding and broad creditor support, along with other case-specific considerations.
- Under § 1122(a), claims may be separately classified when supported by record evidence that expected recoveries and legal regimes materially differ, so long as claims within each class remain substantially similar.
- Under § 1123(a)(4), “same treatment” focuses on equal legal rights and options within the class (including uniform procedures and choices to settle or litigate), not identical net recoveries for every claimant.

## Conclusion

The Sixth Circuit recognized limited Chapter 11 authority to bind creditors through non-debtor injunctions, but required stronger, explicit findings to justify such extraordinary relief, while upholding the plan’s foreign-claimant classification and equal-treatment structure under §§ 1122(a) and 1123(a)(4).


In re Dow Corning Corp., 280 F.3d 648 (6th Cir. 2002)