Default Rate Interest Collectability in Bankruptcy: The Great Debate
April 2, 2019
Since the advent of commercial real estate lending, loan documents have included a Default Rate Interest provision to compensate lenders for costs associated with managing and collecting upon a defaulted loan. Recent bankruptcy court and appellate decisions have brought this issue to the forefront. Naturally, courts have differed in their analysis as to whether Default Rate Interest is an unenforceable penalty and not collectible. This discussion will include bankruptcy lawyers from across the country who have litigated this issue; and, a testifying expert with significant loan servicing expertise who has offered testimony on behalf of secured lenders.
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