Can a debtor reinstate a defaulted loan under a Chapter 11 plan without paying default rate interest? This question was analyzed thoroughly in a recent Southern District of New York Bankruptcy Court decision by Judge Philip Bentley.

Many businesses are—or soon will be—unable to meet their obligations. Not all businesses in distress are unsuccessful; sometimes, as in the economic circumstances arising from the novel coronavirus (COVID-19) and the governmental directives tailored to address the related public health issues, even successful businesses must confront closures and steep declines in demand that could not have been anticipated, and may find it necessary or desirable to restructure their existing debt obligations.