School Specialty Creditors Appeal $24M 'Make-Whole' Penalty

Law360, Chicago (May 2, 2013, 8:59 PM EDT) -- Creditors of educational supply company School Specialty Inc. on Thursday appealed a recent opinion upholding a $23.7 million “make-whole” penalty the bankrupt company must pay private equity lender Bayside Capital LLC.

On April 22, U.S. Bankruptcy Judge Kevin J. Carey recognized the private equity firm’s make-whole claim — representing 35 percent of the $67 million principal on the loan — after finding that the premium was not “plainly disproportionate” to Bayside’s potential loss. Make-whole premiums are designed to compensate lenders in the event of a prepayment...
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