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The Enforceability of Make-Whole Premiums in Bankruptcy

The treatment of prepayment premiums in bankruptcy has gained substantial attention in several recent bankruptcy cases. But in a situation where the borrower has the funds to repay the loan, there is frequently a dispute between lenders and unsecured creditors or equityholders who are looking at less than a full recovery on their claims.

13 minute read August 01, 2014 at 01:52 PM
By
Gary B. Rosenbaum, Jeremy R. Johnson And Gregory Kopacz
The Enforceability of Make-Whole Premiums in Bankruptcy

The treatment of prepayment premiums in bankruptcy has gained substantial attention in several recent bankruptcy cases. In some sense, seeking allowance of a prepayment premium is a “good problem to have” from the lender's viewpoint, because in most bankruptcy cases, lenders are facing a substantial write-down on their prepetition loans.

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