S.D.N.Y. Bankruptcy Court Continues Trend Against Enforcing Make-Whole Premiums

September 3, 2014

On August 26, 2014, the U.S. Bankruptcy Court for the Southern District of New York held that the automatic acceleration of debt resulting from a borrower’s bankruptcy filing did not trigger the borrower’s obligation to pay a make-whole premium to its lenders in satisfaction of their claims under a chapter 11 plan. In re MPM Silicones, LLC, Case No. 14-22503-rdd (Bankr. S.D.N.Y). Bankruptcy Judge Robert D. Drain’s ruling reinforces the recent trend, particularly in the Southern District of New York, against enforcing make-whole premiums after acceleration unless the governing documents provide clear and unambiguous language to the contrary.