The Solvent Debtor's Obligation to Pay Post-Petition Interest

Bankruptcy & Restructuring Advisor

PUBLISHED ON: April 1, 2004

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As most creditors know all too well, ordinarily, unsecured creditors cannot recover interest on their claims accruing after a debtor files a bankruptcy petition because claims for post-petition interest generally are "disallowed." However, post-petition interest will be awarded when the debtor is solvent.

This concept is self evident as an equitable proposition, but its application has caused courts, creditors and practitioners to stumble when considering the rate at which such interest is to be paid. Several distinct analytical approaches—unsurprisingly— have produced different results. This article will address the different schools of thought.