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Megan Clontz Discusses Default Interest Rates and Debtor’s Right to Rebut

January 4, 2022

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.

To read the full article, please click here. Please note a subscription may be required.