GENERAL ELECTRIC CAPITAL CORPORATION, Petitioner-Appellant, v. FUTURE MEDIA PRODUCTIONS INC., Respondent-Appellee., 547 F.3d 956

Summary

The oversecured creditor and the debtor were parties to a Loan and Security Agreement which provided for interest at an index rate plus 1.5 percent per annum, with additional interest of 2 percent per annum after default. The creditors' committee argued that the bankruptcy court correctly determined that the oversecured creditor was entitled to collect interest only at the loan agreement's pre-default rate; the oversecured creditor argued that it was entitled to a presumption in favor of the loan agreement's default rate, subject only to reduction based upon any equities involved. The court held that the rule that an oversecured creditor is not entitled to interest at a default rate when its claim is paid in full pursuant to the terms of a Chapter 11 plan did not apply because the creditor was paid pursuant to a stipulation rather than under a Chapter 11 plan, because in the context of a plan, the provisions of 11 U.S.C.S. § 1124 applied, allowing a debtor to cure its default. Because ...