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Beyond Dollar-for-Dollar Harm: SDNY Bankruptcy Court Narrows the Path to Disallowing Contractual Default Interest

In In re 33 Mako, the U.S. Bankruptcy Court for the Southern District of New York addressed the issue of whether an oversecured creditor may recover post-petition default interest under Section 506(b) of the Bankruptcy Code. In denying the debtor’s motion, the opinion offers meaningful guidance on the application of the five-factor equitable test used to evaluate default interest claims and clarifies how courts should weigh each factor.

8 minute read May 31, 2026 at 11:09 PM
By
Lawrence J. Kotler and Marie Bauer
Beyond Dollar-for-Dollar Harm: SDNY Bankruptcy Court Narrows the Path to Disallowing Contractual Default Interest

On April 4, 2026, the U.S. Bankruptcy Court for the Southern District of New York (the court) in In re 33 Mako, Case No. 25-11256, addressed the issue of whether an oversecured creditor may recover post-petition default interest under Section 506(b) of the Bankruptcy Code.

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