Fifth Circuit finds that make-whole premiums should be considered unmatured interest subject to disallowance under Section 502(b)(2) of the Bankruptcy Code to the extent designed to compensate for future interest payments.

Overview -

On January 17, 2019, the Fifth Circuit Court of Appeals issued its opinion in In re Ultra Petroleum Corporation1 reversing the conclusion of the US Bankruptcy Court for the Southern District of Texas that certain unsecured creditors of Ultra Petroleum Corporation (collectively, with its debtor subsidiaries and affiliates, Ultra) were “impaired” creditors under the Bankruptcy Code. Ultra was insolvent at the commencement of its chapter 11 case, but ultimately became solvent during the case.