Bankruptcy & Creditors' Rights Alert: The Ninth Circuit allows oversecured creditors in bankruptcy to recover default interest

In General Electric Capital Corporation v. Future Media Productions, Inc. 2008 WL3091471 (9th Cir. 2008), the United States Court of Appeals for the Ninth Circuit recently ruled that oversecured creditors whose claims are paid outside of a plan of reorganization in bankruptcy are entitled to default interest pursuant to their state law contractual rights. In doing so, the Ninth Circuit clarified a misapplication of the rule it announced in Entz-White Lumber & Supply, Inc. v. Great Western Bank & Trust, (850 F.2d 1338 (9th Cir. 1988)) and joined the approach in many bankruptcy courts and two other circuit courts of appeals.

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Allen Matkins Leck Gamble Mallory & Natsis LLP on:

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