Make Whole Facility Agreement

December 12, 2020

Most disputes over the applicability of a comprehensive provision deal with the following arguments: (i) the contractual language of the credit contract concerned provides for the payment of the make-all; and, if so, (ii) has a bankruptcy application or other default, accelerates the debt, making it already due and payable, which negates the obligation to pay a payment. [3] Other minor arguments that can be advanced are: (i) if the Make-Whole constitutes an unenforceable sanction under applicable state law, (ii) the Make-Whole entitles to unfeasible interests. 502 B) (2) of the bankruptcy code, iii) if Make-Whole is a secured or unsecured claim, and (iv) if the total amount is inadequate. Nevertheless, the Fifth Circuit recognized that the right of bondholders to an overall premium could continue to be accepted, as upC is solvent. According to the Tribunal, “creditors may recover the make-all amount if (but only in this case) the solvent debtor`s exception survives the abandonment of Article 502 B (2) law by Congress. We doubt that was the case. But we are evacuating and diverting so that the bankruptcy court can answer the question at trial. “Make-all call provisions are defined in the cancellation of a loan. These provisions were included in bond reserves in the 1990s. Issuers generally do not expect to have to use this type of call delivery, and make-all calls are rarely executed.

However, the issuer may decide to use its appeal board for a loan. Then, investors are compensated or fully remunerated for the remaining payments and the amount of the principal of the loan, as stated in the bond. In order to allow the creditor to recover, the contract should have guaranteed the lender a clear right in advance in the event of late payment and acceleration, without the debtor having voluntarily evaded the premium. Id.; See also In re S. Side House, LLC, 2012 WL 273119, at 5 (quote Northwestern Mut. Life Ins. Co., 816 N.Y.S.2d to 836). Compare U.S. Bank Trust Nat`l Ass`n v. AMR Corp. (In re AMR Corp.), 2013 WL 4840474, to 6 (2d Cir. Sept.

12, 2013) (refusal to impose the premium in light of the following language in the debt documents: “when a default event [defines to include the voluntary filing of a debtors` bankruptcy application, which automatically results in an acceleration without any action by the credit giver … and went on, then… the principal amount unpaid … (but to avoid doubt, without Make-Whole Amount), will be due immediately and without further act … “and “[n]o Make-Whole Amount is on the… Equipment instructions accordingly or in connection with a failure or acceleration of equipment notes.¬†“), with In re CP Holdings, Inc., 332 B.R. 380, 382, 385 (W.D. Mo. 2005) (with this language” if the holder of this rating accelerates all or part of the principal sum … the undersigned waives all or part of this principal amount without a pre-premium and agrees to pay an advance premium” clearly gives the creditor the right to recover the premium in the event of an acceleration of the debt. More recently, however, a dispute over these premiums has generally been edited and focuses instead on the technical provisions of the litigious insights.

The Fifth Circuit decision in Ultra Petroleum`s regulation refocuses the analysis on the legal question of whether an overall premium is an immature interest that is not eligible under Section 502 (b) (2). The bankruptcy court first ruled that this was, under New York law, an enforceable compensation, not an unenforceable sentence. The Tribunal rejected UPC`s argument that the total amount “at the time the parties entered into office” was “500 times disproportionate to foreseeable losses” as it would result in a double recovery. The question of whether a claim is considered a guaranteed right is first applied after the . 506 (b) of the bankruptcy code, which provides that a right can be guaranteed as long as it is “guaranteed by property whose value … greater than the scope of such a claim…¬†Therefore, a secured claim can only exist up to the value of the guarantee.