The U.S. Bankruptcy Court for the District of Delaware held in a recent opinion that post-petition interest should be excluded from an unsecured creditor’s claim, as otherwise it would violate the plain meaning of Section 502(b)(2).  In the case of In re Energy Future Holdings Corp., et al., Case No. 14-10979 (CSS) (Bankr. D. Del. Oct. 30, 2015), the debtors objected to creditor indenture trustee’s claim for post-petition interest.

Judge Sontchi held that the claim was limited to the principal and accrued fees and interest due as of the petition date and excluded unmatured, post-petition interest.  The Court further held the plain meaning of § 1129(b)(2) does not require payment to unsecured creditors of post-petition interest when a junior class is receiving a distribution for a plan to be fair and equitable. Rather, the court has the discretion to exercise its equitable power to require the payment of post-petition interest, which may be at the contract rate or such other rate as the court deems appropriate.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach Carl at (302) 622-4272 or at