Court Opinion

ID: 4095622
Source: CourtListenerOpinion
Date Created: 2016-11-04 17:01:12.935438+00
Date Added: 2024-06-11T14:35:03.454041
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

IN RE NEW INVESTMENTS, INC,               No. 13-36194
                          Debtor.
                                           D.C. No.
                                        13-10948-MLB
PACIFICA L 51 LLC,
                Creditor-Appellant,
                                           OPINION
                v.

NEW INVESTMENTS INC.,
                Debtor-Appellee.

    Appeal from the United States Bankruptcy Court
        for the Western District of Washington
      Marc Barreca, Bankruptcy Judge, Presiding

          Argued and Submitted May 3, 2016
                 Seattle, Washington

               Filed November 4, 2016

      Before: Susan P. Graber, Marsha S. Berzon,
        and Mary H. Murguia, Circuit Judges.

              Opinion by Judge Murguia;
               Dissent by Judge Berzon
2                 IN RE NEW INVESTMENTS, INC.

                            SUMMARY*

                             Bankruptcy

     The panel reversed the bankruptcy court’s order
confirming a debtor’s Chapter 11 plan of reorganization,
which proposed to cure the debtor’s default on a loan by a
payment that reflected a pre-default interest rate and
extinguished any other late penalties required under the loan
agreement.

    A Chapter 11 plan may include a provision authorizing
the debtor to remedy any breach of a loan agreement with a
creditor and return to pre-default conditions. Great W. Bank
& Tr. V. Entz-White Lumber & Supply, Inc. (In re Entz-White
Lumber & Supply, Inc.), 850 F.2d 1338 (9th Cir. 1988), held
that a debtor that cures a default is entitled to avoid all
consequences of the default, including higher post-default
interest rates. The panel held that this rule of Entz-White,
allowing a curing debtor to avoid a contractual post-default
interest rate in a loan agreement, is no longer good law in
light of later-enacted 11 U.S.C. § 1123(d), which provides
that, if a plan proposes to cure a default, “the amount
necessary to cure the default shall be determined in
accordance with the underlying agreement and applicable
nonbankruptcy law.” The panel remanded the case for further
proceedings.

   Dissenting, Judge Berzon wrote that neither 11 U.S.C.
§ 1123(d) nor any other provision of the Bankruptcy Code

    *
      This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
               IN RE NEW INVESTMENTS, INC.                  3

provides a definition of “cure” contrary to the one announced
in Entz-White. Accordingly, Entz-White has not been
displaced. Judge Berzon would affirm the bankruptcy court’s
order confirming the debtor’s plan of reorganization, which
reflects the pre-default interest rate included in the
promissory note.

                        COUNSEL

Dillon E. Jackson (argued) and Terrance J. Keenan, Foster
Pepper PLLC, Seattle, Washington; Stuart P. Kastner, Stuart
P. Kastner PLLC, Seattle, Washington; for Creditor-
Appellant.

Lawrence K. Engel (argued), Bellevue, Washington, for
Debtor-Appellee.

                         OPINION

MURGUIA, Circuit Judge:

    In loan agreements—and any subsequent bankruptcy
proceedings—a borrower “defaults” on a loan when he fails
to fulfill a material obligation under the terms of the loan
agreement, such as making a payment by a particular date. A
default can trigger certain consequences, such as foreclosure
on any property securing the loan, late fees and penalties, or
“acceleration,” which occurs when the entire unpaid amount
of the loan becomes immediately due and payable. But the
borrower can also “cure” the default, most often by paying
the arrearages and bringing the loan current. A cure generally
allows the borrower to avoid the consequences of default,
4              IN RE NEW INVESTMENTS, INC.

restores the loan to its original terms, and allows the borrower
to keep the property.

    The Bankruptcy Code incorporates the concept of cure.
Chapter 11 provides that a debtor’s plan of reorganization
must “provide adequate means for the plan’s
implementation,” including the “curing or waiving of any
default.” 11 U.S.C. § 1123(a)(5)(G). This statute means that
a plan of reorganization may include a provision authorizing
the debtor to remedy any breach of a loan agreement with a
creditor and return to pre-default conditions. Great W. Bank
& Tr. v. Entz-White Lumber & Supply, Inc. (In re Entz-White
Lumber & Supply, Inc.), 850 F.2d 1338, 1340 (9th Cir. 1988).

    We held in Entz-White that a debtor who cures a default
“is entitled to avoid all consequences of the default—
including higher post-default interest rates.” Id. at 1342. In
other words, if a loan agreement provided for a higher, post-
default interest rate on arrearages in the event of default, a
debtor who “cures” is entitled to repay the arrearages at the
lower, pre-default interest rate. We concluded that “the
power to cure under the Bankruptcy Code authorizes a plan
to nullify all consequences of default, including avoidance of
default penalties such as higher interest,” even when the
terms of the loan agreement called for a higher interest rate
upon default. Id.

    The case before us requires us to decide whether Entz-
White’s rule that a debtor may nullify a loan agreement’s
requirement of post-default interest remains good law in light
of 11 U.S.C. § 1123(d), a provision that Congress enacted
after Entz-White. Section 1123(d) provides that, if a plan
proposes to cure a default, “the amount necessary to cure the
default shall be determined in accordance with the underlying
               IN RE NEW INVESTMENTS, INC.                     5

agreement and applicable nonbankruptcy law.” 11 U.S.C.
§ 1123(d). We hold that Entz-White’s rule of allowing a
curing debtor to avoid a contractual post-default interest rate
in a loan agreement is no longer valid in light of § 1123(d).

                               I.

    New Investments, Inc. (“New Investments”) borrowed
$3,045,760.51 from Pacifica L 51, LLC’s (“Pacifica”)
predecessor in interest to purchase a hotel property in
Kirkland, Washington. The note, which was secured by a
deed of trust, provided for an interest rate of 8 percent. The
note also specifically provided that in the event of default, the
interest rate would increase by 5 percent.

    New Investments defaulted on the note in 2009. When
Pacifica commenced non-judicial foreclosure proceedings,
New Investments filed for Chapter 11 bankruptcy. New
Investments’s plan of reorganization proposed to cure the
default by selling the property to a third party and using the
proceeds of the sale to pay the outstanding amount of the loan
at the pre-default interest rate. Pacifica objected to the plan
on the ground that, under the terms of the note, it was entitled
to be paid at the higher, post-default interest rate.

    The bankruptcy court confirmed New Investments’s plan
over Pacifica’s objection and authorized the sale of the hotel
for $6,890,000. Of the sale proceeds, $2,830,877.28 would
be paid to Pacifica, reflecting the pre-default interest rate and
extinguishing any other late penalties. Anticipating an
appeal, the bankruptcy court ordered that $100,000 of the
proceeds be reserved for Pacifica’s attorney’s fees on appeal
and that $670,000 be set aside as a disputed claim reserve for
6              IN RE NEW INVESTMENTS, INC.

Pacifica. Pacifica timely appeals from the confirmation
order.

                              II.

    We have jurisdiction under 28 U.S.C. § 158(d), and we
review the bankruptcy court’s interpretation of bankruptcy
statutes de novo. Boyajian v. New Falls Corp. (In re
Boyajian), 564 F.3d 1088, 1090 (9th Cir. 2009). “When
construing the meaning of a statute, we begin with the
language of that statute.” Benko v. Quality Loan Serv. Corp.,
789 F.3d 1111, 1118 (9th Cir. 2015). “If the statutory text is
ambiguous, we employ other tools, such as legislative history,
to construe the meaning of ambiguous terms.” Id. “A party
contending that legislative action changed settled law has the
burden of showing that the legislature intended such a
change.” Green v. Bock Laundry Mach. Co., 490 U.S. 504,
521 (1989).

                              III.

    Chapter 11 of the Bankruptcy Code provides that a plan
of reorganization must, among other things, “provide
adequate means for the plan’s implementation,” including the
“curing or waiving of any default.”                 11 U.S.C.
§ 1123(a)(5)(G). In Entz-White, we observed that the
Bankruptcy Code did not define “cure.” 850 F.2d at 1340.
We borrowed the Second Circuit’s definition: “A default is an
event in the debtor-creditor relationship which triggers certain
consequences. Curing a default commonly means taking care
of the triggering event and returning to pre-default conditions.
The consequences are thus nullified. This is the concept of
‘cure’ used throughout the Bankruptcy Code.” Id. (alteration
omitted) (quoting Di Pierro v. Taddeo (In re Taddeo),
               IN RE NEW INVESTMENTS, INC.                  7

685 F.2d 24, 26–27 (2d Cir. 1982)). We held that “the power
to cure under the Bankruptcy Code authorizes a plan to
nullify all consequences of default, including avoidance of
default penalties such as higher interest.” Id. at 1342. As a
result, a debtor whose plan proposed to cure a default would
allow him to avoid having to pay a higher, post-default
interest rate called for in the loan agreement.

    Entz-White was decided in 1988. In 1994, Congress
amended § 1123 to add subsection (d). Pub. L. No. 103-394,
Title II, § 305, Oct. 22, 1994, 108 Stat. 4106. Subsection (d)
provides:

       Notwithstanding subsection (a) of this section
       and sections 506(b), 1129(a)(7), and 1129(b)
       of this title, if it is proposed in a plan to cure
       a default the amount necessary to cure the
       default shall be determined in accordance with
       the underlying agreement and applicable
       nonbankruptcy law.

11 U.S.C. § 1123(d).

    Subsection § 1123(d) renders void Entz-White’s rule that
a debtor who proposes to cure a default may avoid a higher,
post-default interest rate in a loan agreement. Subsection (d)
governs here because New Investments’s plan proposes to
cure a default. The underlying agreement—here, the
promissory note—requires the payment of a higher interest
rate upon default. And “applicable nonbankruptcy law”—
here, Washington state law—allows for a higher interest rate
8                IN RE NEW INVESTMENTS, INC.

upon default when provided for in the loan agreement.1 See
Wash. Rev. Code Ann. § 61.24.090(1)(a) (providing that a
borrower may cure a monetary default by paying the trustee
“[t]he entire amount then due under the terms of the deed of
trust and the obligation secured thereby, other than such
portion of the principal as would not then be due had no
default occurred”). In other words, under § 1123(d), “the
amount necessary to cure [New Investments’s] default” is
governed by the deed of trust and Washington law, which
respectively require and permit repayment at a higher, post-
default interest rate.

    The plain language of § 1123(d) compels the holding that
a debtor cannot nullify a preexisting obligation in a loan
agreement to pay post-default interest solely by proposing a
cure. But even if we were to read ambiguity into the statute,
the legislative history would not help New Investments. The
House Report for the bill that became § 1123(d) states that
Congress was primarily concerned with overruling the
Supreme Court’s decision in Rake v. Wade, 508 U.S. 464
(1993). H.R. Rep. No. 103-835, at *55 (1994). Rake had
held that a Chapter 13 debtor who proposed to cure a default
was required to pay interest on his arrearages to a secured
creditor even if the underlying loan agreement did not
provide for such interest. 508 U.S. at 472. Congress viewed
this as an untoward result that allowed for “interest on

    1
      We reject New Investments’s argument that Washington’s deed of
trust law cannot constitute “applicable nonbankruptcy law” under
§ 1123(d) because the Bankruptcy Code’s automatic stay would prevent
foreclosure under Washington law. See 11 U.S.C. § 362(a); Wash. Rev.
Code Ann. § 61.24.040. This reading would render the phrase “applicable
nonbankruptcy law” meaningless because the automatic stay would
always trump state law foreclosure provisions, contrary to the statutory
text and intent.
               IN RE NEW INVESTMENTS, INC.                   9

interest payments” and provided an unbargained-for windfall
to creditors. H.R. Rep. No. 103-835, at *55. The House
Report states that § 1123(d) would “limit the secured creditor
to the benefit of the initial bargain with no court contrived
windfall.” Id. It further stated that it was “the Committee’s
intention that a cure pursuant to a plan should operate to put
the debtor in the same position as if the default had never
occurred.” Id.

    The fact that Congress had a particular purpose in mind
when enacting a statute does not limit the effect of the
statute’s text, a principle Entz-White itself recognized. See
850 F.2d at 1341 (noting that a Senate Report for the bill that
became 11 U.S.C. § 1124 showed “only that the drafters in
the Senate were concerned primarily with defaults resulting
in acceleration; it does not show that they meant to confine
the section to that situation”). Rather, “[t]he fact that
Congress may not have foreseen all of the consequences of a
statutory enactment is not a sufficient reason for refusing to
give effect to its plain meaning.” Union Bank v. Wolas,
502 U.S. 151, 158 (1991). By its terms, § 1123(d) tells us to
look to the promissory note and Washington law to determine
what amount New Investments must pay to cure its default.
Here, that analysis requires the payment of post-default
interest.

    This result is further consistent with the intent of
§ 1123(d) because it holds the parties to the benefit of their
bargain. Moreover, the House Report’s statement “that a cure
pursuant to a plan should operate to put the debtor in the same
position as if the default had never occurred” is consistent
with the concept of cure generally, which § 1123(d) has not
altered or attempted to define. See Taddeo, 685 F.2d at
26–27 (“Curing a default commonly means taking care of the
10             IN RE NEW INVESTMENTS, INC.

triggering event and returning to pre-default conditions. The
consequences are thus nullified.”).

    What § 1123(d) affects is how a debtor returns to pre-
default conditions, which can include returning to a lower,
pre-default interest rate. In the traditional case, a borrower
who has defaulted on a loan obligation can cure the default by
paying arrearages. See Restatement (Third) of Property
(Mortgages) § 8.1(b) & cmt. c (1997); Wash. Rev. Code Ann.
§ 61.24.090(a)(1). This procedure allows the borrower to
avoid acceleration or foreclosure, which are some of the more
common consequences of default. See Restatement (Third)
of Property (Mortgages) § 8.1(a); Wash. Rev. Code Ann.
§ 61.24.090(a). However, the borrower does not effectuate a
cure merely by paying past due installments of principal at
the pre-default interest rate. Rather, the borrower’s cure
obligations may also include “late charges, attorneys’ and
trustee’s fees, and publication and court costs.” Restatement
(Third) of Property (Mortgages) § 8.1 cmt. c; see also Wash.
Rev. Code Ann. § 61.24.090(1)(b). It is only once these
penalties are paid that the debtor can return to pre-default
conditions as to the remainder of the loan obligation.

    The common law treatment of cure is consistent with the
Bankruptcy Code’s protections for creditors who would have
been entitled to receive accelerated payment on a defaulted
loan. For a debtor to render such a creditor “unimpaired” and
unable to object to the debtor’s plan, Platinum Capital, Inc.
v. Sylmar Plaza, L.P. (In re Sylmar Plaza, L.P.), 314 F.3d
1070, 1075 (9th Cir. 2002); 11 U.S.C. § 1126(f), the debtor
must cure the default but may not “otherwise alter the legal,
equitable, or contractual rights” of the creditor, 11 U.S.C.
§ 1124(2)(E). Here, one of those rights is post-default
interest, and New Investments’s cure may not alter that right.
               IN RE NEW INVESTMENTS, INC.                   11

    Consistent with § 1124(2), the debtor can return to pre-
default conditions, which can include a lower, pre-default
interest rate, only by fulfilling the obligations of the
underlying loan agreement and applicable state law.
11 U.S.C. § 1123(d). By its terms, § 1123(d) requires that we
look to the “underlying agreement,” not only to the “pre-
default interest provisions” of the underlying agreement. To
read any such limitation into § 1123(d) would be “to add
specific language that Congress did not include in a carefully
considered statute.” Illinois v. Abbott & Assocs., Inc.,
460 U.S. 557, 572, (1983); see also United States v. Plaza
Health Labs., Inc., 3 F.3d 643, 649 (2d Cir. 1993) (“[W]e
cannot add to the statute what congress did not provide.”).
Here, the note provided that upon default, the interest rate on
the loan would increase by 5 percent. Unfortunately for New
Investments, the increased interest rate applies to the entirety
of the note and not just to arrearages.

    We are mindful that “[t]he principal purpose of the
Bankruptcy Code is to grant a fresh start to the honest but
unfortunate debtor.” Marrama v. Citizens Bank of Mass.,
549 U.S. 365, 367 (2007) (internal quotation marks omitted).
And Congress wanted to protect debtors against unbargained-
for interest requirements in enacting § 1123(d). But the
Bankruptcy Code is not a purely remedial statute. Fla. Dep’t
of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33, 51
(2008). “Rather, Chapter 11 strikes a balance between a
debtor’s interest in reorganizing and restructuring its debts
and the creditors’ interest in maximizing the value of the
bankruptcy estate.” Id. If the loan agreement did not require
a higher, post-default interest rate, New Investments would
not have to pay it. However, today’s result holds New
Investments to its bargain by adhering to the terms of its loan
agreement with Pacifica, as required by § 1123(d).
12             IN RE NEW INVESTMENTS, INC.

    Both the text and the legislative history of § 1123(d) make
clear that the provision was intended to limit parties to the
benefit of their bargain when a debtor seeks to effectuate a
cure and return to pre-default conditions. The parties
bargained for a higher interest rate on the note in the event of
default, and Pacifica is entitled to the benefit of that bargain
under the terms of § 1123(d).

                              IV.

    We conclude that Pacifica is entitled to receive payment
of the loan at the post-default interest rate. We therefore
reverse the decision of the bankruptcy court and remand for
further proceedings.

     REVERSED and REMANDED.

BERZON, Circuit Judge, dissenting:

    Neither 11 U.S.C. § 1123(d) nor any other provision of
the Bankruptcy Code provides a definition of “cure” contrary
to the one this Court announced in Great Western Bank &
Trust v. Entz-White Lumber & Supply, Inc. (In re Entz-White
Lumber & Supply, Inc.), 850 F.2d 1338, 1340 (9th Cir. 1988).
We are therefore bound by this Court’s precedent, according
to which New Investments may, in curing its default, pay the
pre-default interest rate contained in the promissory note.

    Instead of abiding by our longstanding case law, the
majority concludes that Congress displaced Entz-White when
it passed § 1123(d). Because neither the text of the statute
               IN RE NEW INVESTMENTS, INC.                  13

nor the legislative history of § 1123(d) support the majority’s
departure, I dissent.

                               I.

    Chapter 11 requires that a debtor’s plan of reorganization
“provide adequate means for the plan’s implementation, such
as . . . curing or waiving of any default.” 11 U.S.C.
§ 1123(a)(5). In the absence of any statutory definition, this
Court held in Entz-White that “[c]uring a default” means
“returning to pre-default conditions,” such that any
consequences of the default are “nullified.” 850 F.2d at 1340
(quoting Di Pierro v. Taddeo (In re Taddeo), 685 F.2d 24,
26–27 (2d Cir. 1982)). Because curing a default returns the
debtor to the status quo ante, we concluded, “the power to
cure under the Bankruptcy Code authorizes a plan to nullify
all consequences of default, including avoidance of default
penalties such as higher interest.” Id. at 1342.

   After this Court decided Entz-White, Congress enacted
11 U.S.C. § 1123(d). Section 1123(d), part of the 1994
amendments to the Bankruptcy Code, provides:

       Notwithstanding subsection (a) of this section
       and sections 506(b), 1129(a)(7), and 1129(b)
       of this title, if it is proposed in a plan to cure
       a default the amount necessary to cure the
       default shall be determined in accordance with
       the underlying agreement and applicable
       nonbankruptcy law.

Pacifica maintains—and the majority agrees—that this
provision overruled Entz-White’s holding that a debtor who
cures a default, thus “nullify[ing] all consequences of” that
14             IN RE NEW INVESTMENTS, INC.

default, may repay arrearages at the pre-default interest rate.
See 850 F.3d at 1342.

    Pacifica bears the burden of showing that Congress, in
passing § 1123(d), intended to change settled law. Tome v.
United States, 513 U.S. 150, 163 (1995) (quoting Green v.
Bock Laundry Mach. Co., 490 U.S. 504, 521 (1989)). In
determining whether Pacifica has met this burden, we “will
not read the Bankruptcy Code to erode past bankruptcy
practice absent a clear indication that Congress intended such
a departure.” Hamilton v. Lanning, 560 U.S. 505, 517 (2010)
(citations and internal quotation marks omitted).

    Pacifica has not carried this burden, as both the statutory
text and the legislative history of § 1123(d) support the
continuing viability of Entz-White’s holding. The majority
opinion errs in concluding otherwise, and, in doing so,
wrongly imposes a severe penalty on debtors in New
Investments’ situation.

                              II.

    The Bankruptcy Reform Act of 1994, among other things,
added nearly identical language regarding how one cures a
default to Chapters 11, 12, and 13 of the Bankruptcy Code.
Pub. L. No. 103-394, § 305, 108 Stat. 4106 (1994). Like the
subsection here at issue, 11 U.S.C. §§ 1222(d) and 1322(e)
provide that, notwithstanding other provisions of the
Bankruptcy Code not relevant here, “if it is proposed in a plan
to cure a default, the amount necessary to cure the default,
shall be determined in accordance with the underlying
agreement and applicable nonbankruptcy law.”
               IN RE NEW INVESTMENTS, INC.                    15

    Nowhere did the 1994 amendments define “cure a
default” or suggest that this Circuit’s then-operative
definition of “cure” was incorrect. Rather, § 1123(d)
indicates which materials the parties may consult in
determining how to cure a default. Accordingly, as a result
of the 1994 amendments, the terms of a cure are
circumscribed by the underlying agreement and applicable
nonbankruptcy law.

    Neither § 1123(d) nor any other provision of the
Bankruptcy Code explains where in the underlying agreement
to look for the provisions that apply in the event of a cure. If,
as Entz-White held, “[c]uring a default” means “returning to
pre-default conditions,” 850 F.2d at 1340, the provisions of
the agreement setting out the pre-default interest rate provide
the relevant information. If “curing a default” means paying
a penalty triggered by the default, the provisions of the
agreement addressing higher post-default interest rates
establish the relevant requirements. But in Entz-White, we
decisively rejected this alternative definition of “cure.” Id. at
1342. We called the creditor’s argument in favor of this
reading “spurious,” as it “amount[ed] to saying, once more,
that the higher rate of interest is not a consequence of default
that can be cured.” Id.

    In short, the text of § 1123(d) makes clear that New
Investments’ cure will be based on the terms of the
promissory note, but offers no guidance on which of the
note’s provisions governs here. Entz-White provides that
guidance, by specifying that a “cure” permits the debtor to
“avoid all consequences of the default.” Id. Applying that
understanding, it is the pre-default interest provisions of the
underlying agreement that govern. The majority’s conclusion
16             IN RE NEW INVESTMENTS, INC.

that § 1123(d) overruled Entz-White has no basis in the text
of the statute.

                              III.

    The legislative history of § 1123(d) confirms that
Congress did not mean to disturb this Court’s holding in Entz-
White. In adding § 1123(d), Congress focused on addressing
an entirely separate matter—the Supreme Court’s holding in
Rake v. Wade, 508 U.S. 464 (1993). H.R. Rep. No. 103-835,
at 55 (1994); see also S. Rep. No. 103-168, at 53 (1993)
(discussing the parallel provision included in the Senate bill).

    In Rake, the Supreme Court held that an oversecured
creditor was entitled to pre- and post-confirmation interest on
mortgage arrearages paid to cure a default under a Chapter 13
plan. 508 U.S. at 471–75. This reading of the relevant
provisions of the Bankruptcy Code, §§ 506(b), 1322(b), and
1325(a)(5), permitted secured creditors to collect interest on
top of the interest payments paid by debtors under their
mortgages. Id. at 470–75.

    Congress overtly rejected this result in enacting
§ 1123(d). H.R. Rep. No. 103-835, at 55. The amendments
to § 1123 were contained in § 305 of the Bankruptcy Reform
Act of 1994, which is entitled “Interest on Interest.” Pub. L.
No. 103-394, § 305, 108 Stat. 4106, 4134 (1994). The
relevant House Report states that the amendments “will have
the effect of overruling the decision of the Supreme Court in
Rake v. Wade,” because Rake “had the effect of providing a
windfall to secured creditors” by giving them “interest on
interest payments, and interest on the late charges and other
fees, even where applicable laws prohibit[] such interest and
even when it was something that was not contemplated by
               IN RE NEW INVESTMENTS, INC.                    17

either party in the original transaction.” H.R. Rep. No. 103-
835, at 55.

    Far from repudiating Entz-White’s holding, the House
Report reiterated Entz-White’s interpretation of “cure,”
stating, “[i]t is the Committee’s intention that a cure pursuant
to a plan should operate to put the debtor in the same position
as if the default had never occurred.” Id. The legislative
history thus indicates, at the very least, that the new provision
was not meant sub silentio to enact a definition of “cure”
conflicting with that adopted in Entz-White. It also suggests
that the relevant provisions of the “underlying agreement” for
a “cure” are those that would have applied “if the default had
never occurred.” See id.

    In sum, the pertinent 1994 amendments eliminated the
possibility of a “court contrived windfall” for secured
creditors. Id. Pacifica’s challenge to the Bankruptcy Court’s
confirmation order does not implicate the concern that
animated Congress. Like the text of the statute, the
legislative history in no way suggests that Entz-White’s
definition of “cure” is incorrect or was overruled.

    Here, the underlying agreement provides both pre- and
post-default interest rates. As the statute requires, we look to
that agreement in determining which rates may apply. And
in selecting which provision of the contract governs, we rely
on our precedent and use the pre-default rate. New
Investments therefore could cure the default by paying
interest on the debt at the pre-default rate.
18             IN RE NEW INVESTMENTS, INC.

                             IV.

    Notwithstanding its recitation of the relevant text and
legislative history, the majority somehow concludes that
Entz-White is no longer controlling. Relying on an incorrect
interpretation of § 1123(d), the majority’s opinion mistakenly
upsets this Circuit’s binding precedent.

    A three judge panel of this Court is “bound by decisions
of prior panels unless an en banc decision, Supreme Court
decision or subsequent legislation undermines those
decisions.” Gen. Const. Co. v. Castro, 401 F.3d 963, 975 (9th
Cir. 2005) (quoting Benny v. U.S. Parole Comm’n, 295 F.3d
977, 983 (9th Cir. 2002)). No act of Congress or intervening
higher authority justifies the panel’s departure from our
precedent here.

    As discussed, Congress has not defined “cure the default”
in the years since we decided Entz-White. There is thus no
“clear indication that Congress intended . . . a departure,”
Hamilton, 560 U.S. at 517, from this Court’s past practice.
The interpretation of the statute best supported by the
legislative record favors continuity. No intervening case law
from the Supreme Court or the Ninth Circuit calls Entz-White
into doubt. On the contrary, this Court has continued to rely
on Entz-White’s holding. See Platinum Capital, Inc. v.
Sylmar Plaza, L.P. (In re Sylmar Plaza, L.P.), 314 F.3d 1070,
1075 (9th Cir. 2002) (concluding Entz-White precluded a
creditor’s argument “that a plan intended to nullify the
consequences of a default (thereby avoiding the higher post-
default interest rate) does not meet the purposes of the
Bankruptcy Code”); cf. Gen. Elec. Capital Corp. v. Future
Media Prods. Inc., 547 F.3d 956, 960–61 (9th Cir. 2008)
(treating Entz-White as good law, but concluding it did not
               IN RE NEW INVESTMENTS, INC.                   19

apply to a claim paid in full as a result of asset sales outside
of a Chapter 11 plan).

    Stare decisis thus requires us to apply Entz-White and
hold that New Investments “is entitled to avoid all
consequences of the default—including higher post-default
interest rates.” 850 F.2d at 1342. I would affirm the
Bankruptcy Court order confirming New Investments’ plan
of reorganization, which reflects the pre-default interest rate
included in the promissory note.