Borrowing is not free. Instead, a borrower must pay the cost of borrowing. Typically, this cost is paid with cash, although it could be paid with property—for example, a warrant. In a recent case, In re Baxano Surgical, Inc., No. 14-12545 (CSS) (Bankr. D. Del.), the creditors’ committee asserted that paying part of the cost of borrowing up front with a warrant created “original issue discount”—or OID—and that such should be treated as unmatured interest.
Premium Content For:
- Litigation Section