Mere Acceleration Does Not Trigger Prepayment Premium

Law360, New York (February 18, 2014, 2:35 PM EST) -- The U.S. Court of Appeals for the Fifth Circuit held on Jan. 27, 2014, that a lender’s acceleration due to a borrower’s payment default did not trigger a prepayment premium. In re Denver Merchandise Mart Inc., *1 (5th Cir. Jan. 27, 2014). Affirming the lower courts’ application of state law, the court held that “the plain language of the contract does not require the payment of the prepayment consideration in the event of mere acceleration.” Id. at *5.


Prepayment premiums, also known as “make-whole” provisions,...
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