Interest

INTEREST

In re Weinberg, 410 B.R. 19, 37 (9th Cir. BAP 2009)

“It is settled law that where a debt that is found to be nondischargeable arose under state

law, “the award of prejudgment interest is also governed by state law.” In re Niles, 106 F.3d 1456,

1463 (9th Cir. 1997)”.

General Electric Cap. v. Future Media Productions, 547 F.3d 956 (9th Cir 2008)

Where creditor’s oversecured claim was paid in full out of the proceeds of an asset sale,

rather than pursuant to a chapter 11 plan, and thus not subject to the “cure” provisions of § 1124

that a chapter 11 plan would allow, creditor was entitled to a default rate of interest. Court

distinguishes the holding in In re Entz-White Lumber and Supply, Inc., 850 F.2d 1338 (9th Cir.

1988), and disapproves of the holding in In re Casa Blanca Project Lenders, 196 B.R. 140 (9th

Cir. BAP 1996)

In re Slatkin, 525 F.3d 805, 820 (9th Cir. 2008)

“. . .[W]hen a court has granted judgment on all substantive issues, the court has the

authority to award prejudgment interest under [Cal. Civ. Code] § 3288.”

Till v. SCS Credit Corp., 124 S.Ct. 1951 (2004)

Formula approach for setting interest rate based on prime rate adjusted for risk of

nonpayment was appropriate cramdown rate of interest.

In re Cardelucci, 285 F.3d 1231 (9th Cir. 2002), cert. denied, 537 U.S. 1072 (2002)

Postpetition interest in a chapter 11 plan based on 11 U.S.C. § 726(a)(5) is to be calculated

using the federal judgment interest rate under 28 U.S.C. § 1961 rather than the contract or state

law rate.

In re Crystal Properties, Ltd., L.P., 268 F.3d 743 (9th Cir. 2001)

“Without notice or demand” provision in default interest clause of loan agreement did not

alter requirement that holder of defaulted loan must carry out some affirmative act to exercise its

option to accelerate the loan and invoke the default interest clause. Default interest rate did not

come into effect until holder of the note first took affirmative action to put the debtor on notice

that it intended to exercise its option to accelerate, and thus invoke the default rate.

In re Banks, 263 F.3d 862 (9th Cir. 2001)

“The federal prejudgment interest rate applies to actions brought under federal statute, such

as bankruptcy proceedings, unless the equities of the case require a different rate.”

In re Udhus, 218 B.R. 513 (9th Cir. B.A.P. 1998)

Bank not entitled to default rate of interest under either § 506(b) or § 1123

In re Melenyzer, 143 B.R. 829 (Bankr. W.D Tex. 1992)

Interest under 726(a)(5) paid at federal judgment rate

In re Camino Real Landscape Maintenance Contractors Inc., 818 F.2d 1503 (9th Cir. 1987)

Prevailing market rate applies re: discount rate for present value purposes.

205

In re Southeast Co., 868 F.2d 335 (9th Cir. 1989)

Interest in Ch. 11 – right to 506(b) interest

In re Entz-White Lumber & Supply, Inc., 850 F.2d 1338 (9th Cir. 1988)

Right to non-default interest rate

In re Nucorp Energy, Inc., 902 F.2d 729 (9th Cir. 1990)

1961 applies to pre-judgment interest

In re Beverly Hills Bancorp, 752 F.2d 1334, 1339 (9th Cir. 1984)

No right to postpetition interest on claims.

206