Emory Bankruptcy Developments Journal


Jacob Dean


Default-rate interest'interest triggered by breach of a contractual obligation'implicates both a determination of claim's status and the claim's ultimate confirmation. Moreover, default-rate interest can not only amount to millions of dollars rapidly, but also jeopardize a chapter 11 plan's chances at confirmation. In August 2015, a panel of judges on the Eleventh Circuit ruled on the matter, creating a circuit split for a brief time until a Ninth Circuit panel addressed the question in 2016. Last year, the Ninth Circuit eliminated the split, and all circuits now agree the plain language of the Bankruptcy Reform Act of 1994, an amendment Congress added in 1994 to overrule a Supreme Court case, allows for collection of default interest. The circuits previously disagreed, however, whether Congress intended a requirement for 'cure' to be payment of interest at the default rate. This Comment explains why both panels are incorrect.