Special counsel Ben Feder authored the Law360 article “EFH Extends New York Make-Whole Rationale To Delaware.” The article discusses Judge Christopher Sontchi’s opinion in the Energy Future Holdings Corp.’s bankruptcy case ruling that the repayment in full of certain secured notes did not trigger an obligation by the debtors to pay a make-whole premium. Make-whole premiums are often used in connection with the issuance of debt in order to protect noteholders with long-term investment horizons from being repaid early when interest rates drop. Disputes over the payment of make-whole premiums in large Chapter 11 cases are almost certain to continue, as other debtors will look to take advantage of the current low interest rate environment while it still lasts. Judge Sontchi’s ruling in EFH makes it clear that only clear and express language in the applicable documents will serve to support a claim for such payments.
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