October 18, 2021

Treatment Of Bankruptcy Claims With Guarantees And The Unusual (But Quite Interesting) Issue Concerning Allocation Of Postpetition Interest

Corporate restructuring team co-leader James Millar authored an article for the Norton Annual Survey of Bankruptcy Law, 2021 Ed. titled “Treatment Of Bankruptcy Claims With Guarantees And The Unusual (But Quite Interesting) Issue Concerning Allocation Of Postpetition Interest.”

In the article, Millar explores the origin of the “Ivanhoe rule,” which comes from a Supreme Court case from 1935 and the vitality of the rule today. Given that the “Ivanhoe rule” stands as a rule of federal law, the article also discusses the permutations surrounding issues of state law. In particular, does state law always follow the Ivanhoe rule and what happens in a bankruptcy case if there is a conflict between state law and the Ivanhoe rule?

Lastly, Millar addresses a specific issue concerning postpetition interest, specifically, in situations where a guarantor pays some (but not all) of the debt owed to the creditor, whether the creditor could allocate the amount received from the guarantor to the payment of postpetition interest.

Reprinted from Norton Annual Survey of Bankruptcy Law, 2021 Ed., with permission of Thomson Reuters. Copyright © 2021. Further use without the permission of Thomson Reuters is prohibited. For further information about this publication, please visit https://legal.thomsonreuters.com/en/products/law-books or call 800.328.9352.

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