Prepetition Default Interest — Take Nothing For Granted

Law360, New York (May 01, 2014, 1:01 PM ET) -- The case is In Re Shree Mahalaxmi Inc., 503 B.R. 794 (Bankr. W.D. Tex. 2014). After a mortgage lender learned of a prepetition default during a bankruptcy, it filed an amendment to its proof of claim to add prepetition default interest. The debtor objected to both the original claim and to the addition of prepetition default interest. The court’s decision turned on interpretation of the loan documents under applicable state law.

The debtor owned a hotel, which was subject to a deed of trust in favor...
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