Many bankruptcy practitioners have focused on the recent decisions in Momentive that forced secured creditors to refinance prepetition loans at below market interest rates. Most of these practitioners’ publications focus on the courts’ findings and the potential implication on future matters. However, three interesting questions are not addressed in most (if any) of these publications. In part 1 of this article series featured on QuickReadBuzz.com, Managing Director Michael Vitti addresses two of the three questions:
How much economic value was taken from the secured creditors if one believes they should have received the market rate of interest?
Is there a limit to the amount of implied lender’s costs, profits, and fees that should be removed from the market interest rate when determining the cramdown interest rate?
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