Caitlin Cline

Document Type

Research Memorandum

Publication Date




In General Electric Capital Corp. v. Future Media Productions, Inc., the Ninth Circuit addressed the issue of whether an oversecured creditor is entitled to the contracted-for default rate of interest when the creditor has been paid in full pursuant to an asset sale governed by § 363 of the Bankruptcy Code. Despite prior precedent to the contrary, the court answered the question in the affirmative. In its previous decision in Great Western Bank & Trust v. Entz- White Lumber and Supply, Inc. (In re Entz-White Lumber & Supply, Inc.), where the debtor had paid the creditor in full pursuant to a chapter 11 plan (thus “curing” the default), the Ninth Circuit held that an oversecured creditor is not entitled to default interest. The Future Media decision, by drawing a distinction between asset sales conducted while a plan is pending and those conducted after a plan has been confirmed, is likely to bring even more confusion to an already perplexing area of the law.


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