11th Circuit Blesses Lender with Default-Rate Interest

A Chapter 11 debtor’s reorganization plan purporting to cure a default under a pre-bankruptcy loan agreement must pay “the agreed-upon default rate interest,” consistent with “the underlying agreement” and the “applicable nonbankruptcy law,” held the U.S. Court of Appeals for the Eleventh Circuit on Aug. 31, 2015. In re Sagamore Partners Ltd., 2015 U.S. App. LEXIS 15382, at *11 (11th Cir. Aug. 31, 2015). In this article, SRZ partner Michael L. Cook discusses the Eleventh Circuit’s decision, which reversed the district and bankruptcy courts and found that they had “erred in [holding] that [the lenders] waived their rights to default-rate interest.”