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.

A mortgage loan repurchase facility (more casually referred to as a "repo") is a financing structure commonly utilized to finance mortgage loans. These facilities are utilized by both residential and commercial mortgage loan originators and aggregators to finance mortgage loans that they originate or acquire. The structure is favored by liquidity providers in the mortgage loan finance arena due to its preferential "safe harbor" treatment under the United States Bankruptcy Code (the "Bankruptcy Code"), as further described below.