Make-Whole Premium

News & Analysis as of

Court Rules on Applicability of Make-Whole Premiums Upon Debt Acceleration

In the context of make-whole premiums, court decisions suggest that the applicability of the premium upon a refinancing in bankruptcy will be governed by the wording of the debt documents, and that if an automatic...more

No Market Interest Rate and No Make Whole: Momentive Performance Court Rejects Lender Arguments Against Confirmation

On August 26, 2014, Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York ruled that (i) the debtors could satisfy the cramdown requirements of section 1129(b) of the Bankruptcy...more

Another Court Rules That Availability of Make-Whole Premiums in Bankruptcy Depends on Governing Documents

In a recent bench decision in In re MPM Silicones, LLC et al., Case No. 14-22503-RDD (Bankr. S.D.N.Y. August 26, 2014), the Bankruptcy Court considered bondholders’ right to recover make-whole premiums (premiums paid for...more

Momentive Senior Noteholders Lose Fight for Make-Whole Premium

In connection with a contentious restructuring, Judge Drain of the Bankruptcy Court for the Southern District of New York, ruled recently that certain lenders to Momentive Performance Materials Inc. (Case No. 14-22503) had no...more

Recent Decisions Underscore Importance of Carefully Drafted Make-Whole Premium Provisions in Loan Documents

What you need to know: Two recent decisions have shown that courts will rely heavily on the plain meaning of contract language when considering the enforceability of make-whole provisions. The United States Court of...more

October 2013: Insurance Litigation Update - Deductibles Need Not Be Made Whole

On July 30, 2013, the Connecticut Supreme Court released its opinion in Fireman’s Fund Insurance Company v. TD Banknorth Insurance Agency, Inc., SC 18796 (Conn. 2013), answering a certified question from the Second Circuit on...more

Make-Whole Premiums Get to "Pass Go" in Bankruptcy Court

A make-whole premium is a lump-sum payment that becomes due under a financing agreement when repayment occurs before the stated maturity date, thereby depriving the lender of all future interest payments bargained for under...more

Bond Mechanics 201

This week we continue our exploration of some important concepts of bond mechanics. Let’s don protective eyewear, roll up our sleeves and prepare to get our hands dirty as we probe the inner workings of call protection....more

Second Circuit Rules Against Make-Whole Premium for Refinancing of Accelerated Debt

The U.S. Court of Appeals for the Second Circuit has upheld a bankruptcy court’s decision enforcing indenture language providing for the automatic acceleration, without make-whole premium, of secured American Airline, Inc....more

Bill on Bankruptcy: Make-Whole Premiums, Lehman, ResCap  [Video]

July 17 (Bloomberg Law) -- Bankruptcy Judge Sarah A. Hall in Oklahoma City is this week's "Judge of the Week" on the new video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. In the...more

Committee's Attack upon Lender's Make-Whole Premium Denied

The United States Bankruptcy Court for the District of Delaware (the “Court”) recently upheld a $23.7 million make-whole payment (the “Make-Whole Payment”) in In re School Specialty (Case No. 13-10125), denying the assertion...more

In re School Specialty, Inc., Case No. 13-10125 (KJC) (Bankr. D. Del. Apr. 22, 2013)

In an age of historically low interest rates, lenders rely on fee income and other devices to enhance their returns. One of these mechanisms -- and one that can have dramatic consequences for a borrower -- is the inclusion of...more

Bill on Bankruptcy: Kodak Plan Bumps the Debt, Craters Stock  [Video]

May 2 (Bloomberg Law) -- Eastman Kodak Co. filed a Chapter 11 plan that cratered the stock and bumped up the unsecured notes, although the plan may be revised to pay off second-lien debt fully in cash, as Bloomberg Law's Lee...more

Supreme Court Rules on Equitable Defenses to Reimbursement Claim by Employee Health Plan

Executive Summary: Reimbursement claim brought under ERISA sec. 502(a)(3) was akin to “equitable lien by agreement,” and therefore could not be defeated by equitable defenses that contradicted plan terms. ...more

Latest Trends in the Enforceability of Make-Whole Premiums

A lender’s entitlement to a make-whole premium, that is, a prepayment penalty designed to compensate the lender for the loss of interest payments it would have received had the borrower continued to service the debt through...more

Bill on Bankruptcy: AMR Make-Whole Opinion Vulnerable on Appeal [Video]

Jan. 23 (Bloomberg) -- The case of the week on the Bloomberg bankruptcy video is the decision by Bankruptcy Judge Sean Lane who concluded that American Airlines isn't obliged to pay several hundred million dollars in...more

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