9th U.S. Circuit Court of Appeals,
Bankruptcy
Nov. 11, 2016
9th Circuit limits a borrower's ability to 'cure' in Chapter 11
The court addressed "whether Entz-White's rule that a debtor may nullify a loan agreement's requirement of post-default interest remains good law in light of [Section 1123(d)]."
David S. Kupetz
Shareholder
SulmeyerKupetz PC
333 S Hope St 35FL
Los Angeles , California 90071
Email: dkupetz@sulmeyerlaw.com
UC Hastings College of the Law
David is an expert in bankruptcy, business reorganization, restructuring, assignments for the benefit of creditors, and other insolvency solutions.
Default rate interest provisions are standard language in business loan agreements. A borrower's default on a loan triggers consequences, including higher default rate interest. A borrower can generally "cure" the default and reinstate the loan to its original terms. Disputes over claims for default rate interest arise in the context of bankruptcy cases filed by financially distressed borrowers.
Chapter 11 of the Bankruptcy Code provides a framework for business reorganization. The p...
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