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Chapter 11 bankruptcies generally find the debtor to be insolvent, but not always. Occasionally, a debtor will emerge from the bankruptcy process as a solvent entity, and in those situations, Bankruptcy Code §726(a)(5) may entitle creditors of the debtor’s estate to post-petition interest at the legal rate from the date of filing the petition.” In other words, as Melanie L. Cyganowski observes in her article, What Constitutes the “Legal Rate” in a Solvent Debtor Bankruptcy Case?, “the Bankruptcy Code affords creditors an opportunity to recoup the time-value for the lost use of the debtor’s assets.”
But the “legal rate” is neither defined by the Bankruptcy Code nor its legislative history. Accordingly, as Otterbourg partner and former U.S. Chief Bankruptcy Judge Cyganowski further observes, the courts have been forced to supply meaning to this nebulous term. Read her entire analysis in What Constitutes the “Legal Rate” in a Solvent Debtor Bankruptcy Case?
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