Caution: Make-Whole Provisions Are Taken At Face Value

Law360, New York (November 14, 2013, 6:29 PM ET) -- Two recent decisions have shown that courts will rely heavily on the plain meaning of contract language when considering the enforceability of make-whole provisions.

On Sept. 12, 2013, the United States Court of Appeals for the Second Circuit’s decision in the American Airlines bankruptcy case held that, under the language of the loan indenture at issue, secured noteholders did not have the right to collect a make-whole premium in connection with the post-petition refinancing of their debt where the borrower’s voluntary petition for bankruptcy automatically accelerated...
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