IUE-CWA STATEMENT OF SUPPORT FOR THE PROPOSED PLAN OF REORGANIZATION

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1 Pg 1 of 6 Thomas M. Kennedy Susan M. Jennik Serge Ambroise Kennedy Jennik & Murray, P.C. Counsel for IUE-CWA, AFL-CIO 113 University Place New York, NY UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK )[ In re MPM Silicones, LLC, et a!., )[ Hearing: August 18, 2014 Objection Deadline: July 28, 2014 Chapter 11 Case No (RDD) Jointly Administered IUE-CWA STATEMENT OF SUPPORT FOR THE PROPOSED PLAN OF REORGANIZATION 1. ille-cw A, AFL-CIO ("IUE-CW A") is a labor union that represents the overwhelming majority of union members employed by Debtors MPM Silicones, LLC, et al ("MPM") and submits this statement of support for the Plan of Reorganization filed by MPM. The current national collective bargaining agreement between ille-cw A and MPM was ejlecuted on June 17,2013 and ellpires on June 26, The 2013 collective bargaining contract was reached only after difficult and intense negotiations between ille-cw A and MPM in which both parties made concessions and modified their positions to find a common ground. Those 2013 negotiations were made more difficult by MPM's enormous overhang of debt which has restricted its capital investments and significantly impacted its negotiations with ille-cwa in collective bargaining. 2. The ille-cw A strongly supports the proposed Plan of Reorganization [Docket No. 172] because it calls for the assumption of MPM's collective bargaining agreements, at Article X, Section 10.3(b ), and because the Plan of Reorganization will significantly reduce the

2 Pg 2 of 6 unreasonable debt level that MPM acquired since its spin-off as an independent company by General Electric Company ("GE") in I. BACKGROUND 3. On April13, 2014, the Debtors filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code. 4. On April22, 2014, the Office of the United States Trustee for the Southern District of New York appointed the Official Committee of Unsecured Creditors ("Creditors' Committee") to represent the interests of unsecured creditors of the Debtors [Docket No. 73]. The Creditors' Committee currently consists of seven members, including IUE-CW A The IUE-CWA represents two bargaining units at the MPM Waterford, New York facility and a bargaining unit located in MPM's Willoughby, Ohio facility. The 800 union members employed in these facilities have invested millions of hours of labor into the company over the last 7 decades. 6. MPM has a 70-year history. It began as the Advanced Materials business of GE. In 2006, investment funds affiliated with Apollo Global Management, LLC acquired the company from GE. MPM was incorporated in 2006, for the purpose of acquiring the assets and stock of the GE entities that comprised GE's Advanced Materials business. The acquisition was completed in December, Since MPM was spun-off from GE, IUE-CW A and MPM have had protracted negotiations to reach a collective bargaining agreement for the Waterford and Willoughby facilities. The IUE-CW A is the primary union representing the employees of GE and, in The Creditors' Committee is currently comprised of the following members: (i) US Bank National Association, as Indenture Trustee; (ii) Blue Mountain Credit Alternatives Master Fund L.P.; (iii) Aurelius Capital Partners, LP; (iv) Unimin Corporation; (v) Fischbach USA Inc.; (vi) Pension Benefit Guaranty Corporation; and (vii) IUE-CWA, AFL-CIO. 2

3 Pg 3 of 6 partnership with GE, has developed a strong package of wages and benefits that allow its hardworking members and their families access to a middle class life and the opportunity to retire in dignity. As IUE-CW A feared, MPM emerged from the spin-off as a highly leveraged company that had significant cash flow issues that caused it to seek relief from its employees in the form of lower labor costs. After the spin-off, MPM demanded in collective bargaining that IUE-CW A accept reductions in wages and benefits that MPM deemed necessary. These negotiations were difficult and came close to a strike on a number of occasions. Ultimately, the negotiators were able to hammer out a contract that provided MPM with reduced labor costs and still protected IUE-CW A members to the maximum extent possible. 8. The MPM jobs are critical to the IUE-CW A members employed by MPM and to their communities. In today's America, it would be exceedingly difficult for MPM union members in Willoughby, Ohio and Waterford, New York to obtain employment at equivalent wages and benefits if the MPM bankruptcy does not result in a successful reorganization. Any threat to these jobs is a threat not only to these employees but also to their families and communities. II. THEPLAN 9. The proposed Plan of Reorganization, filed by MPM on May 12, 2014, states at Article X, Section 10.3(b) that: All collective bargaining agreements to which one or more of the Debtors is a party shall be treated as executory contracts under this Plan and on the Effective Date will be assumed by the applicable Reorganized Debtors pursuant to the provisions of section 365 of the Bankruptcy Code. [Docket No. 172.] This provision is intended to and will have the effect of ensuring that the 2013 IUE-CW A collective bargaining agreement continues without interruption or interference at both the Waterford, New York and Willoughby, Ohio facilities. 3

4 Pg 4 of MPM will be completely assuming these collective bargaining agreements. A party which assumes an executory contract must assume it in its entirety; it may not be assumed in part and rejected in part. Department of the Air Force v. Carolina Parachute Corp., 907 F.2d 1469, 1472 (4th Cir. 1990); In re Chicago, R.I. & Pac. R.R., 860 F.2d 267, 272 (7th Cir. 1988). In other words, a debtor cannot assume the benefits of an executory contract without assuming its burdens as well. See, e.g., Covington v. Covington Land L.P., 71 F.3d 1221, 1226 (6th Cir. 1995) ("When a debtor assumes the lease or contract under 365, it must assume both the benefits and the burdens of the contract.") 11. In the context of labor relations, the Supreme Court held in NLRB v. Bildisco & Bildisco, 465 US 513, 531 (1984) that "if a debtor-in-possession elects to assume an executory contract, however, it assumes the contract cum onere, and the expenses and liabilities incurred may be treated as administrative expenses, which are afforded the highest priority on the debtor's estate" under 11 U.S.C. 503(b)(1)(A) (1982 ed.). 12. It would be extremely disruptive to the operations of MPM to engage in a labor dispute with the IUE-CW A at this time when MPM is seeking to exit the Chapter 11 process. MPM has not, and could not, argue that the existing IUE-CWA collective bargaining agreement imposes significant burdens on its ability to operate as a viable entity. If this Plan of Reorganization is not approved, the business, and its employees, suppliers and customers will plunge into an uncertain, even chaotic environment that will jeopardize MPM's ability to survive. The IUE-CW A therefore supports confirmation of the proposed Plan of Reorganization. 13. IUE-CWA is, of course, aware that MPM has instituted litigation against the First Lien and 1.5 Lien Trustees regarding whether the "make-whole" premiums are due under the First Lien and 1.5 Lien Indentures. See Momentive Performance Materials Inc. v. The Bank of 4

5 Pg 5 of 6 New York Mellon Trust Co., N.A. (In re MPM Silicones, LLC), Adv. Proc. No (RDD) (Bankr. S.D.N.Y. May 9, 2014) [Docket No. 1]; Momentive Performance Materials Inc. v. Wilmington Trust, N.A. (In re MPM Silicones, LLC), Adv. Proc. No (RDD) (Bankr. S.D.N.Y. May 9, 2014) [Docket No. 1]. Also, on May 30, 2014, the indenture trustee for the Subordinated Notes filed a complaint against the Debtors and the indenture trustee for the Second Lien Notes seeking, among other things, a declaratory judgment that the Subordinated Notes are pari passu in right of payment with the Second Lien Notes. U.S. Bank Nat'l Assoc. v. Wilmington Savings Fund Society, FSB (In re MPM Silicones, LLC), Adv. Proc. No (RDD) (Bankr. S.D.N.Y. May 30, 2014) [Docket No. 1]. 14. The IUE-CWA takes no position on the merits of those inter-creditor disputes. IUE-CW A does urge the Court and the parties to expeditiously resolve these inter-creditor disputes on a basis that does not hinder MPM from exiting the Chapter 11 process as a deleveraged, solvent employer with sufficient EBITDA to (i) support the wages and benefits which the IUE-CWA has bargained at Waterford and Willoughby, and (ii) allow for critically needed capital investment into the Waterford and Willoughby production facilities. 5

6 Pg 6 of 6 CONCLUSION For all of the foregoing reasons, IUE-CW A requests that the Court approve the Plan of Reorganization. Dated: July 28, 2014 New York, NY Respectfully submitted, Kennedy, Jennik & Murray, P.C. Counsel for /UE-CWA, AFL-C/0 By: Thomas M. Kennedy (0993) Susan M. Jennik Serge Ambroise 113 University Place, 7 1 h floor Tel. (212) Fax (212) tkennedy@kjmlabor.com sjennik@kjmlabor.com sambroise@kjmlabor.com 6

Case Document 86 Filed in TXSB on 03/10/15 Page 1 of 5

Case Document 86 Filed in TXSB on 03/10/15 Page 1 of 5 Case 15-31086 Document 86 Filed in TXSB on 03/10/15 Page 1 of 5 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: UNIVERSITY GENERAL HEALTH SYSTEM, INC.,