Northwest Lender Objects To $1.4 billion DIP Loan

Law360, New York (August 2, 2006, 12:00 AM EDT) -- JPMorgan Chase Bank objected Wednesday to a significant portion of the $1.4 billion debtor-in-possession loan that Northwest Airlines Corp. recently negotiated to help it emerge from bankruptcy.

According to court documents filed by JPMorgan, Northwest is trying to weasel out of a $19.5 million prepayment fee by arguing that it does not reflect actual damages to the lender. Northwest also said its loans’ due dates were accelerated after it declared for bankruptcy, and that it is therefore not subject to a voluntarily prepayment fee.

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