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.

Post-judgment interest is not something most lenders consider when making a loan. In fact, it is not ordinarily the subject of significant analysis even when litigation becomes necessary. Where the United States District Court is the preferred venue, however, parties easily can fall into the quandary of being stuck with the federal statutory post-judgment interest rate, which is currently less than 1% per annum.