In JPMCC 2007-C1 Grasslawn Lodging, LLC v. Transwest Resort Props. Inc., et al. (In re Transwest Resort Props. Inc.), Case No. 16-16221, 2018 U.S. App. LEXIS 1947 (9th Cir. Jan. 25, 2018), the Ninth Circuit was the first Circuit court to decide a significant split in the lower courts between the “per plan” or

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 the maturity date of the loan, depends principally on the plain language of the bond indenture or credit agreement.  See, e.g., HSBC Bank USA, N.A. v. Calpine Corp. (In re Calpine Corp.), No. 07 Civ 3088 (GBD), 2010 WL 3835200, at *4 (S.D.N.Y. Sept. 15, 2010) (after reviewing the debt instruments, the district court agreed with the bankruptcy court insofar as it held that the lenders were not entitled to make-whole premiums because the plain language of the debt instruments did not provide for the payment of premiums in the event of payment pursuant to acceleration); In re Solutia, Inc., 379 B.R. 473, 485 n.7 (Bankr. S.D.N.Y. 2007) (where the indenture provided for automatic acceleration upon the filing of a chapter 11 petition but was silent as to whether any make-whole amount would or would not be payable in connection with such an acceleration, the court refused to “read into agreements between sophisticated parties provisions that are not there,” and held that no make-whole amount was due); Premier Entm’t Biloxi, LLC v. U.S. Bank N.A. (In re Premier Entm’t Biloxi LLC), 445 B.R. 582, 625-27 (Bankr. S.D. Miss. 2010) (trust indenture that provided for automatic acceleration of notes upon default arising from debtors’ bankruptcy filing rendered the notes mature at time of their repayment as part of consummation of debtors’ confirmed chapter 11 plan, such that noteholders had no contractual right to prepayment premium).
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As part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”), Congress added Section 562 to the Bankruptcy Code. Section 562 governs the timing of damage measurements with respect to swap agreements, securities contracts, forward contracts, commodity contracts, repurchase agreements, and master netting agreements that are rejected or terminated in connection with

Does a secured creditor have an absolute right to acquire its collateral, which is sold pursuant to a plan of reorganization, by credit bidding its debt? The Third Circuit Court of Appeals, in a strict constructionist opinion, has just answered this question in the negative.

The Court of Appeals in In re Philadelphia Newspapers, LLC