Davis Polk partner Adam Shpeen was quoted in Bloomberg Law on a recent Fifth Circuit ruling, which determined that claims for payment of a make-whole premium are disallowed under section 502(b)(2) of the Bankruptcy Code. Adam noted that the decision “has the potential to be a game changer and puts all investors holding unsecured debt on notice that claims for payment of a make-whole amount arising on or after a bankruptcy filing might be disallowed entirely.” He also added that “if other courts adopt the Fifth Circuit’s reasoning, the impact could be far-reaching, affecting scores of high-yield debt instruments that contain make-whole provisions.”

“‘Make-Whole’ Payments Face Potential Game-Changer in Bankruptcy,” Bloomberg Law (November 1, 2022) (subscription required)

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