Spencer Fane attorney Megan Clontz recently authored an article featured in the American Bankruptcy Institute covering bankruptcy law, including provision § 506(b) and related interest rates.
Titled “Default Interest Rates Are Presumed Reasonable Under § 506(b), but a Debtor’s Ability to Rebut Varies,” the article explains the legality behind situations when over-secured creditors are eligible to receive post-petition interest.
“[The] courts are split as to (1) whether or not the same applies to interest incurred at a contracted default rate when curing a monetary default through the debtor’s plan of reorganization, and (2) whether equitable considerations allow courts to disallow interest at the agreed-upon, contractual default rate, despite the provisions of §§ 506(b) and 1123(d),” Megan explained in the article.
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