In a Chapter 11 case filed by a breast implant manufacturer with a presumptively solvent estate, the debtor's proposed reorganization plan had to provide interest on the general unsecured claims, from the date that the petition was filed, at the rate provided in the federal post-judgment interest statute. And Did You Know . . . Recognizing a split of authority, a Michigan bankruptcy court has ruled that in a Chapter 11 case filed by a breast implant manufacturer with a presumptively solvent estate, the debtor's proposed reorganization plan had to provide interest on the general unsecured claims, from the date that the petition was filed, at the rate provided in the federal post-judgment interest statute.
Bankruptcy courts are units of the district court.
Further, Congress intended, the court determined, for the term to have this commonly understood meaning. Further, using the federal judgment rate leads to a more efficient administration of bankruptcy estates. It gives all parties an easily ascertainable, nationally uniform rate. It avoids the administrative nightmare that would be created if the trustee had to use state law to individually calculate the interest due to each unsecured creditor. The court rejected the creditors' claim that using the federal judgment rate would deprive them of the benefit of their bargain by giving shareholders, by the mere happenstance of bankruptcy, a windfall.