Document Type
Research Memorandum
Publication Date
2024
Abstract
(Excerpt)
The United States Supreme Court's decision in Till v. SCS Credit Corp. established a formula approach for determining interest rates in cases filed under chapter 13 of title 11 of the United States Code (the "Bankruptcy Code"). The Till decision implemented the formula approach, requiring the national prime rate to be augmented by a risk premium to account for the debtor's heightened nonpayment risk. Till is limited to chapter 13 cases, however, courts have applied the Till test in chapter 11 and 12 cases.
This memorandum examines the different methods utilized in bankruptcy to determine appropriate interest rates. Section I outlines the legal framework for determining interest rates in bankruptcy under the Bankruptcy Code. Section II examines the impact of the Till decision on interest rate strategies across chapters 11, 12, and 13