Manatt Bankruptcy Partner Schuyler Carroll was quoted in an article by Bloomberg Law about the U.S. Court of Appeals’ decision in the case between Hertz Corp. and bondholders following Hertz’s solvency after their bankruptcy.
To redress the amount of interest lost to bondholders when Hertz paid their debt off early, the Third Circuit ruled that the company must pay unsecured bondholders post-petition interest and special make-whole fees. While the majority found that the bondholders’ make-whole premiums were categorized under unmatured interest, prohibited under the code, Hertz was still required to pay creditors interest that accrued post-bankruptcy because they became solvent. “The first part of the decision is a victory for Hertz, but the second part, which is much more important, takes away that victory and gives it to the noteholders,” said Carroll.
Read the full article here.