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A Chapter 11 debtor “cannot nullify a preexisting obligation in a loan agreement to pay post-default interest solely by proposing a cure,” held a split panel of the U.S. Court of Appeals for the Ninth Circuit on Nov. 4, 2016. In re New Investments Inc., 2016 WL 6543520, *3 (9th Cir. Nov. 4, 2016) (2-1). Reversing the bankruptcy court, the court’s majority relied on a 1994 amendment of Bankruptcy Code § 1123(d) (” … the amount necessary to cure [a] default [under a reorganization plan] shall be determined in accordance with the underlying agreement and applicable nonbankruptcy law.”) Id. at *2. In effect, the amended § 1123(d) overruled the Ninth Circuit’s earlier holding that “a debtor who cures a default, thus ‘nullify[ing] all consequences of’ that default, may repay arrearages at the pre-default interest rate.” Id. at *5, quoting In re Entz-White Lumber & Supply, Inc., 850 F.2d 1338, 1342 (9th Cir. 1988). According to the Ninth Circuit, the “plain language of § 1123(d) compels” the result it reached. Id. at *3.
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By Paul Bent
Will a Rising Tide of Managed Solutions Transactions Sink the Most Venerated of Leasing Provisions?
There is change afoot in the equipment leasing marketplace, and it portends a potentially seismic shift in the perception, usefulness and utility of the well-tested HOHW clause.
By Brian Holland
Corporations with private fleets in the U.S., as well as for-hire carriers, have begun ordering faster than before. As the economy continues to strengthen, this trend will continue to grow and so will the need to replace aging equipment.
By Steven Strom
Diagnosing financial distress, and the ability to address the relevant issues, is a necessary role of board members and senior executives.
By Nicole Hay and Thomas Scannell
Texas businesses and their attorneys should be aware of legal and practical issues that may arise in the event of a shipping insolvency. Two particularly murky areas that have been illuminated by recent case law are maritime liens and reclamation rights.